Understanding Tariffs
A tariff is a tax on goods brought into the United States from other countries. Though these taxes don’t apply to services, international trade agreements can affect both goods and services. Before World War II, tariffs were a major source of government income but recently have played a smaller role in federal revenue as other taxes have become more important.
Purpose of Tariffs
Tariffs are intended to serve several functions:
- protecting U.S. businesses from foreign competition
- making imported products more expensive than domestic alternatives
- discouraging overseas manufacturers from flooding U.S. markets
- providing leverage in international negotiations
- generating additional government revenue
Who Controls Tariffs?
Though the Constitution gives Congress the power to set tariffs, Congress has passed laws that allow the president to impose them directly; however, the president’s authority isn't unlimited. The president still must follow specific rules and procedures established by Congress. Think of it like a company owner (Congress) giving their manager (the president) permission to make certain decisions within established guidelines.
Financial Impact
The cost burden of tariffs follows a complex path:
- initially paid by U.S. companies importing goods
- collected by U.S. Customs and Border Protection with monies going directly to the U.S. Treasury
- often passed down by companies to consumers through higher prices
Recent tariffs considered would place import taxes on goods from Canada, Mexico, and increase Chinese tariffs, which could raise costs for consumers across the economy, including health care costs. The White House has announced that tariffs will go into effect on March 4, but it is still unclear if there will be a final decision by then.
Potential Direct Impacts of Tariffs for Counselors
Tariffs could have direct and indirect impacts such as:
1. Increased Operating Costs
- increased costs for therapeutic tools and supplies
- more expensive telehealth technology and electronic health record systems
- rising construction and renovation costs for practice spaces
- more expensive medical supplies and equipment
- higher prices for PPE and safety equipment
- disrupted supply chains for practice materials
2. Client-Related Impacts
- reduced client spending power due to economic pressure
- increased demand for services due to financial stress
- insurance coverage changes as rising health care costs
- more clients seeking reduced or sliding scale fees
Other Potential Effects
1. Practice Management and Service Delivery Changes
- need to adjust service fees to maintain profitability
- pressure to see more clients to maintain revenue
- more focus on group therapy and telehealth options
- increased administrative costs and overhead expenses
- need to restructure business models
- higher technology and software costs
2. Professional Development
- more expensive continuing education materials
- higher costs for professional equipment and resources
- increased expenses for conference attendance and training
Potential Adaptation Strategies (if tariffs go into effect)
- review and adjust fee structures
- implement cost-saving measures
- develop multiple revenue streams
- build emergency financial reserves
- possible consolidation with larger practices
- focus on efficiency and cost management
Recommended Actions
- review and update business plans
- communicate changes transparently with clients
- consider joining group purchasing organizations
- stay informed about policy developments and exemptions
- contact your governor and state attorney general for support and advocacy
- contact your state and federal legislators for support and advocacy
