ELI5: Why do tariffs affect prices?

Tariffs make things more expensive because they are like a tax on things coming from other countries.

Imagine your favorite candy bar. It normally costs $1. But the store owner has to pay a special fee, a tariff, of 20 cents to the government for every candy bar that comes from far away. Now, the store owner has to decide what to do:

• Option 1: They could pay the 20 cents themselves and still sell the candy for $1. But then they make less money!

• Option 2: They could raise the price of the candy bar to $1.20 to cover the extra 20 cents they have to pay.

That's how tariffs work in real life. When the government puts a tariff on something, companies that sell that thing have to pay extra. To avoid losing money, they often raise the price of their goods.

Think of it like this:

• No tariff: The candy bar costs $1.
• Tariff added: The candy bar now costs $1.10 or $1.20.