Updated: Using Technology to Promote Autonomy and Understanding with Tariffs
Even with Ford Motor Co.’s statement that President Donald J. Trump’s 2018 metals tariffs took about $1 billion from Ford’s profits, President Trump insists that it is not companies, but foreign governments that pay tariffs.
The question of who pays is central to whether U.S. citizens will support the proposed tariffs. While tariffs are typically hidden from a domestic buyer’s immediate view, existing technology could show individual buyers who pays tariffs and in respect of which product.
This could help provide understanding and support autonomy and resolution in spaces where alternative dispute resolution, early dispute resolution, online dispute resolution, and other neutral-third-party avenues for resolution are unavailable.
Tariffs are not paid by foreign governments. Tariffs are simply money paid by the U.S. importer to the U.S. Customs and Border Protection office and ultimately to the U.S. Treasury.
Consistent with this, President Trump announced his intention to move 90,000 newly hired IRS agents–accountants with expertise in taxation–to the border. While it is unclear whether the 90,000 IRS agents even exist, it is clear that, with the threat of tariffs, these highly trained tax experts would have their work cut out for them. Mexico was the U.S.’s largest trade partner in 2024. In 2022, Canada and Mexico accounted for $908.9 billion and $855.1 billion in trade with the United States, respectively.
Tariffs are “direct taxes that are applied to goods [or services] imported from a different country,” and these are ultimately passed on to consumers in the form of higher prices. President Trump’s 2018-2019 tariffs “increased prices for both imported and domestically produced goods” purchased by U.S. companies and consumers.
Tariffs are simply “not a meaningful source of government revenue” for the U.S., in part because tariffs increase prices and decrease the real gross domestic product (GDP) of the country issuing them. Tariffs undermine jobs and inhibit innovation. Knowing this, a country is understandably reticent to issue tariffs and might only do so for a compelling reason, such as protecting an essential domestic industry (i.e., milk production) or to defend itself by retaliating against another country’s tariffs.
Part of what makes the threatened 2025 tariffs different, is that President Trump wants to use tariffs to raise revenues, finance tax cuts, force countries to behave as President Trump demands, and to compel resource-rich countries to relinquish their sovereignty and join the United States as states. (For more on today’s confrontation with Columbia, see Carola Guerrero De León, “Colombia's President Responds to Trump's 50% Tariffs with Counter Tariffs; 'I Will Resist You,'” L.A. Times (Jan. 27) (available here).) The proposed tariffs include a 25% tariff on Mexican and Canadian goods and services (both could meet with retaliatory tariffs) and a 60% (or is it now just 10%?) tariff on Chinese goods and services. These tariffs, rather than raise revenue, threaten to drive the U.S. into a severe economic depression.
Once implemented, the proposed tariffs could impact every aspect of U.S. life, pricing many goods and supplies out of the market for many households and businesses. Supply chains will fail, and workers will lose their jobs. No one will be spared–not even in California, the world’s fifth largest economy. Despite its wealth, the threatened tariffs could prevent Los Angeles from accessing the steel, wood, cement, and other products that will be needed to rebuild from this winter’s devastating fires.
The tariffs could have an immediate effect on access to health care. Seventy-two percent of all medicines used in the U.S. are produced abroad. China is a major producer of pharmaceutical ingredients. A 60% tariff on Chinese goods and the proposed 25% tariffs on Mexico and Canada could place essential medicines out of reach–either physically or financially–for everyone in the nation, regardless of their health insurance or need.
Yet, in light of all of the proposals and changes rapidly distracting the U.S., its citizens will question whether the tariffs are to blame for their hardship. After all, under prior administrations, the U.S. has suffered shortages of foods, toilet paper, essential medicines, and building materials. With tariffs, which are only directly paid by the importer, there is always something else to blame for higher prices: inflation, corporate greed, foreign government action, or product quality.
Just like technology can support party autonomy in a dispute, today’s technology can support a buyer’s autonomy by showing the buyer (1) the amount of tariff that has been paid in respect of any product and (2) how much that product (or its best similar substitute) cost one year ago, before the tariffs were proposed.
This transparent reporting could help buyers evaluate whether, for example, a 60% tariff could result in an 80% price increase across the board or, as President Trump suggests, none at all. This information could settle debates surrounding who ultimately pays tariffs and whether tariffs raise prices across all products or only those where the tariff is applied. This information could help buyers and sellers evaluate whether tariffs reduce selection or the availability of materials, as I propose they will.
Online sellers, with their easily adaptable pricing platforms, could instantly show every buyer a good’s price and how much tariff has been paid in respect of a product. Brick-and-mortar stores could do the same using a QR Code–the easily updatable app technology that is already used to instantly update menus and prices.
Further, using the receipt to tell buyers how much tax they have paid has been an important way to directly inform the buyer of just how much tax a government is demanding of them. Putting it on the receipt also prevents taxes from inflating the cost of goods in the way that hidden tariffs do. The final purchase receipt could show the prices and taxes as before, and could contain a separate line for the amount of tariff that was paid in respect of any product ultimately purchased.
When consumer groups have demanded that all consumers be similarly informed of the amount of tariff paid for a product, politicians responded by highlighting the nightmare that such reporting could entail. Finalized products contain a combination of many product components that are tariffed at various rates (if at all), charged at different times, and with different price variations. Producing that information to every buyer before every purchase, they argued, would be impossible.
But that is no longer true. The technology exists that can show us how these proposals will affect them, personally. This will enable U.S. citizens to understand and support, or push back against these proposals.
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Dr. Katherine Simpson is an arbitrator with Simpson Dispute Resolution (U.S.) and 33 Bedford Row Chambers (UK). See https://simpsonadr.net. She has written extensively on the Court of Arbitration for Sport Olympics arbitration and the appeal proceedings involving U.S. gymnast Jordan Chiles for CPR Speaks. Those articles can be found here.
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