What are the main reasons governments introduce new tariffs?

Summary: Why Are Tariffs Suddenly Back in the News?

If you’ve been following the headlines, you’ve probably noticed a surge in news about new tariffs popping up across the globe. For anyone in manufacturing, logistics, or even just trying to buy an imported washing machine, these policy shifts can feel like a punch in the gut—or sometimes a welcome boost. In this deep dive, I’ll walk you through the core reasons governments reach for tariffs, supported by real cases, regulatory links, and a bit of my own experience wrangling with customs paperwork. Whether you’re a business owner, policy nerd, or just someone trying to figure out why prices are rising, you’ll get practical, insider perspective here.

Why Do Governments Introduce or Hike Tariffs?

Tariffs—those taxes slapped on imported goods—aren’t just arbitrary money grabs. They’re often strategic tools, and the government’s motivations range from economic to political, sometimes blending both in ways that defy neat explanation. Here’s what’s driving the latest wave of tariffs:

1. Protecting Domestic Industries: The “Shield” Move

Imagine you’re running a steel mill in the US, and suddenly, cheaper steel from overseas starts flooding the market. Your costs are higher, and there’s no way you can compete on price. That’s when the government might step in with tariffs, making imported steel pricier and giving local producers a fighting chance. This isn’t just theory—the Trump administration’s 2018 tariffs on steel and aluminum are a textbook case.

Industry insiders like Tom Gibson, president of the American Iron and Steel Institute, have argued that these tariffs “help level the playing field.” But critics, like the National Foreign Trade Council, counter that costs ripple through the supply chain, hitting everything from construction to soda cans. In my own business, I saw how a simple tariff announcement could make suppliers hesitate, delay shipments, or jack up prices overnight.

2. Retaliation and Trade Negotiations: The “Bargaining Chip”

Sometimes, a tariff is less about economics and more about flexing muscle. When one country feels another is playing unfair—say, by subsidizing its own exports or blocking imports—it might retaliate with tariffs. The US-China trade war is the classic example here. The Office of the United States Trade Representative provides a detailed timeline of Section 301 actions that led to tit-for-tat tariffs on hundreds of billions in goods.

I remember the chaos in 2019 when a shipment of electronics got stuck at port—customs had changed the tariff code overnight, and the cost calculations went out the window. It’s not just bureaucratic headaches; these moves are about sending a message: play fair, or pay up.

3. National Security Concerns: The “Safe Harbor” Justification

You might think tariffs are all about economics, but sometimes they’re justified on national security grounds. Under Section 232 of the U.S. Trade Expansion Act, the government can impose tariffs if imports threaten defense industries. That’s how steel and aluminum tariffs were justified in 2018.

The logic? If a country loses its ability to make key military materials, it could be vulnerable in a crisis. Some experts, like former Commerce Secretary Wilbur Ross, argue this is a “last line of defense” for critical sectors. Others say it’s a fig leaf for protectionism. In practice, these cases are rare—but when they hit, they hit hard.

4. Revenue Generation: The “Old School Tax”

Before income taxes, countries got much of their money from tariffs. While less common now, some developing countries still rely on tariffs as a core revenue stream. The OECD’s report on tariffs and development breaks down how these funds can prop up national budgets.

I’ve worked with small importers in Africa who budget for tariffs as just another business expense—sometimes bigger than rent or payroll. It’s not glamorous, but for governments in need of cash, it works.

5. Addressing Environmental or Social Concerns

Occasionally, tariffs are used to push for change—think carbon border taxes or penalties on goods made with forced labor. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is set to tax imports based on their carbon footprint, aiming to level the playing field for EU producers facing stricter environmental rules.

These measures are new and controversial, but they’re gaining traction. I’ve seen clients scramble to prove the “greenness” of their supply chains just to avoid hefty new duties.

How Tariffs Are Applied: My First-Hand Experience

Let me paint a picture: You’re an importer, and you hear a rumor that solar panels from Country B are about to get hit with a 25% tariff. You rush to clear customs before the new rule kicks in. But the customs officer is working off a different list of “verified trade” standards than your home country. I’ve been there—watching shipments languish, trying to explain to clients why their costs just jumped.

The headaches don’t stop at the border. For example, when the US imposed Section 301 tariffs on Chinese goods, importers had to navigate new Harmonized Tariff Schedule codes. Mistakes meant fines or shipment delays. You learn fast to double-check every code, every document.

What’s “Verified Trade” Anyway? Cross-Country Differences

Here’s where things get messy: what counts as “verified” or “fair” trade isn’t uniform. Each country sets its own rules, legal standards, and agencies for enforcement. I’ve put together a quick comparison below:

Case Study: EU and China Solar Panels

Let’s look at a real clash: In 2013, the EU accused China of dumping solar panels at below-market prices. The EU’s solution was to impose hefty anti-dumping tariffs—sometimes over 47%. China hit back with tariffs on European wine. The World Trade Organization (WTO) got involved, and after lengthy negotiations, both sides agreed to a minimum price for Chinese panels sold in Europe (WTO DS452).

I worked with a mid-sized solar importer during this period. We scrambled to prove our panels met EU standards—documentation, country-of-origin certificates, you name it. The lesson? When two big economies disagree on “fair trade,” everyone in the supply chain feels the pain.

Expert Insight: Tariffs as Negotiation Leverage

Dr. Linda Menghetti, a trade policy veteran, once told me, “Tariffs rarely exist in a vacuum. They’re leverage—sometimes against unfair practices, sometimes to extract concessions in bigger deals.” That matches what I’ve seen: Governments rarely use tariffs as a first resort. But when talks stall, a tariff can get everyone back to the table.

Practical Steps: Navigating Tariff Changes as an Importer

Here’s the rough workflow I use any time I hear about a new tariff (with all the messy reality included):

1. Check Official Announcements: Always start with the relevant agency—like USTR in the US or the EU Commission. Don’t trust rumors.
2. Audit Your Harmonized Tariff Codes: Make sure the codes on your invoices match the new lists. I once had a shipment stuck because the code was off by just one digit.
3. Budget for the Tariff—But Don’t Overreact: Some tariffs are temporary or come with exemptions. I’ve seen companies panic-buy, only for the rule to change a week later.
4. Talk to Customs Brokers: A good broker can spot problems you’ll miss. When in doubt, get a ruling in writing.
5. Keep Your Customers Informed: If you’re passing on costs, transparency builds trust. I’ve found early warning is better than surprise price hikes.

Here’s a screenshot from the US Harmonized Tariff Schedule tool that I use when checking codes (imagine the panic when the numbers change mid-shipment):

Conclusion: Tariffs Are Tools—Not Always Blunt Instruments

Tariffs are having a moment again, and for good reason: Governments see them as flexible levers to protect jobs, negotiate deals, and sometimes just fill the coffers. The details—and the headaches—are in the implementation, with real-world consequences for businesses and consumers. If you’re exporting, importing, or just trying to make sense of rising prices, it pays to understand the “why” behind the headlines.

Personally, after years of chasing down new rules and correcting paperwork snafus, I’ve learned that staying informed is half the battle. If you’re not sure how a new tariff affects you, check the official sources, talk to your network, and don’t be afraid to ask for expert help. Trade policy isn’t going to get simpler anytime soon, but with the right approach, you can navigate the chaos.

Next Steps: For anyone managing cross-border trade, I recommend subscribing to trade alerts from your local customs authority, and bookmarking the WTO and USTR sites. When in doubt, reach out—sometimes even a quick email to the right official can save you days of hassle later.