Tariff
A tax a government charges on physical goods imported from abroad, paid by the importer at the border.
Last reviewed July 22, 2026
Reviewed for accuracy and clarity by Sandeep Singh before publication. Learn about our editorial process.
What it means
A tariff is a tax charged on physical goods brought into a country from abroad, collected from the importing business at the border. It's usually calculated as a percentage of the goods' value. Tariffs apply only to tangible goods — cars, steel, food, appliances — not to services, software, or other intangibles.
Why it matters
The importing country's own businesses pay tariffs, not the foreign exporter — and how much of that cost reaches consumer prices depends on whether businesses absorb it, pass it on, or switch suppliers, not on the tariff rate alone.
Common misunderstandings
- The exporting country doesn't pay the tariff — the importing business does, to its own government.
- A given tariff percentage rarely translates into an equivalent price increase, since businesses often absorb part of the cost or buyers switch to untariffed substitutes.
Where you'll see it
In news coverage of trade disputes, and reflected indirectly in prices on imported goods.
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