Recently, the United States once again revised and raised import tariffs on a range of products from China, sparking major discussion in the business community. But who exactly pays these tariffs, how do they function, and why does it matter for entrepreneurs, importers, and everyday consumers? Let’s break it down.
What is a tariff and why is it used?
A customs tariff is a tax imposed by a government on imported goods. Its main goals are:
- To protect domestic manufacturers from cheaper foreign products;
- To increase government revenue;
- To influence trade policies of other countries (especially in the context of trade wars).
Which tariffs were recently increased in the US?
In 2024–2025, the US announced an increase in tariffs on a wide range of Chinese goods, including:
- Electric vehicles – tariff increased to 100% (up from the previous 25%);
- Microchips and semiconductors;
- Batteries and lithium cells;
- Solar panels, medical equipment, steel, and aluminum.
This is part of a broader US strategy aimed at reducing reliance on Chinese technology and strengthening domestic industry.
Who actually pays the tariff: China or the US importer?
A common myth is that China pays these tariffs. In reality:
- The tariff is paid by the US importer when the goods cross the border;
- The Chinese manufacturer may not even be aware of the tariff amount — they simply sell at the agreed contract price;
- The American company buying the goods must factor the tariff into the product’s total cost.
As is often the case in business, these extra costs are eventually passed on to the end consumer — that is, American buyers who purchase the imported product in stores.
A real-world example
Let’s imagine a US company buys an electric car from China for $30,000.
- Previously, the 25% tariff meant the importer paid an extra $7,500.
- Now, with the 100% tariff — they pay an additional $30,000.
So, the cost of importing rises to $60,000, and that’s without including shipping, logistics, customs clearance, etc. The product becomes non-competitive in the US market.
What are the consequences?
- Increased prices for American consumers.
On average, tariff hikes lead to higher retail prices for imports. - Shifting supply chains.
Many companies are looking for alternatives to China — such as Vietnam, India, or Mexico. - Investing in domestic manufacturing.
Some large corporations are exploring US-based production to avoid tariffs altogether. - Escalation of trade tensions between the US and China.
What this means for small and medium businesses
Entrepreneurs who buy Chinese goods for resale in the US (for example, via Amazon or Shopify) face serious challenges:
- Increased product costs;
- Need to reassess profit margins;
- In some cases — complete withdrawal from certain product categories.
That’s why it’s crucial to:
- Regularly check the latest tariff schedules (through USTR or your customs broker);
- Plan shipments with extra costs in mind;
- Explore ways to reduce costs (e.g., re-labeling, production in a third country, or tariff engineering).
We can help you reduce your risks
Our team in China and the US helps businesses adapt to these changing trade realities:
- Accurate tariff calculations for your goods;
- Sourcing alternatives outside of China;
- Optimized logistics planning with duties in mind;
- Full shipment support to the US (FBA, FBM);
- Consulting on company registration, taxes, and certifications.
If you’re importing into the US or planning to enter the American market — contact us. We’ll help you protect your profits, even with the new rules in place.
