What are tariffs? Who gets the money from tariffs? Here's how tariffs work

• President Donald Trump on Wednesday dropped a barrage of tariffs on about 60 countries during an event in the Rose Garden he trumpeted as "Liberation Day."

President Donald Trump on Wednesday dropped a barrage of tariffs on about 60 countries during an event in the Rose Garden he trumpeted as "Liberation Day."

Trump hailed the tariffs, which affect all U.S. trading partners and imports, as a "declaration of economic independence," arguing that it will help correct decades of what he said has been unfair treatment to Americans.

Touting he was "putting America first," Trump argues the tariffs will rejuvenate the nation's declining manufacturing sector, but many economists worry Trump's imposition of his largest-scale tariffs to date could further weaken the economy.

Stock markets around the world tumbled as they opened Thursday. Apple and retail giants Walmart and Nike had "major meltdowns," according to Reuters.

Here's how tariffs work, what reciprocal tariffs are, who actually pays them and where the money goes.

What did Trump do with tariffs?

Speaking at a ceremony outside the White House Wednesday, Trump announced a 10% base line tariffs on imports from all foreign countries, as well as much-higher, so-called reciprocal actions on about 60 other countries. For example, Trump announced China will now add a 34% tariff on top of a previous import tax imposed on the country's goods earlier this year.

Other countries hit the hardest by Trump's tariffs include Vietnam, Cambodia, Sri Lanka, Madagascar, Laos, Lesotho, and Syria.

What are tariffs?

Tariffs are taxes that governments impose on trade. They are primarily levied on imports, typically to protect local industries, according to scholars with the Woodrow Wilson Center.

These taxes are paid by import companies bringing the tariffed goods into the country.

How do tariffs work?

Here's an example of how a tariff would work: Scholars with the Wilson Center, in a Tariff 101 article, said to imagine a local market selling apples. The retailer can choose between locally grown or imported ones (say, Germany, one of the nation's larger apple importers). If Germany wants to sell the apples in this market, they might find their goods subjected to a tax tariff — resulting in those imported apples being more expensive than the ones in the U.S.

How are tariffs collected?

The U.S. Treasury secretary is responsible for establishing regulations on the collection of tariffs, but the U.S. Customs and Border Protection is tasked with enforcing them at nearly 330 ports of entry across the country. This includes at border crossing by roads or rail, or at seaports and airports.

But the government doesn't sit at those border crossings and calculate each tariff owed for each shipment; instead, importers have to file paperwork electronically with the U.S. CBP detailing what they are bringing into the country, according to the Wall Street Journal. Customs agents are tasked with reviewing that information in their system before clearing it for release into the U.S., although sometimes random inspections take place.

Who gets the money from tariffs? Where does tariff money go?

When an importer pays a tariff — such as clothing, steel or apples — that money is collected by the U.S. Customs and Border Protection and sent straight to the U.S. Treasury, according to the Congressional Research Service.

The money is then dumped into the government's general fund and used for anything, from education to social programs to infrastructure.

Who pays tariffs?

Tariffs are paid by the importer, or an intermediary acting on the importer's behalf.

Trump has argued that it is the exporter — in this case America — who takes the hit. But research has found that U.S. businesses and customers end up paying tariffs through higher prices; According to The New York Times, trade policy experts agree American consumers will "most likely" bear the cost of the new U.S. tariffs, as they did during Trump's first term.

What are reciprocal tariffs?

Reciprocal tariffs, when used in the context of trade, refers to a measure taken by both parties to ensure fairness in bilateral commerce.

Trump, in the concept of "reciprocal trade" pushed reciprocal tariffs in his 2023 campaign materials, pushing an "eye for an eye" approach with other countries, declaring several times he believes the U.S. has, when it comes to global trade, been treated unfairly.

When do Trump tariffs begin?

These 10% tariffs for all countries will take effect on April 5 at 12:01 a.m. Reciprocal tariffs with higher percentages will take effect at 12:01 a.m. on April 9.

Lori Comstock is a New Jersey-based journalist with the Mid-Atlantic Connect Team.