Businesses operate in a financial environment shaped by government policies, and two of the most important policies are taxes and tariffs. Taxes affect all companies, while tariffs play a critical role for businesses engaged in global trade or reliant on imported goods. Both require careful attention because they directly influence operating costs, compliance requirements, and overall competitiveness.
Understanding taxes and tariffs gives your business an advantage. When you know how they work, you can prepare for policy changes, identify opportunities to reduce costs, and make informed decisions that support your financial goals. This article explains the essentials and offers practical strategies to help you manage these obligations with confidence.
Tariffs are taxes on imported goods and materials. They are a source of revenue and a tool to influence trade.
Governments impose tariffs to protect local industries, balance trade relationships, or generate funds for public programs. By making imported goods more expensive, tariffs encourage consumers and businesses to buy from domestic producers. For example, agricultural products, steel, and textiles are industries where tariffs are common because governments want to support local farmers, manufacturers, and workers.
Tariffs are intentional measures governments use to shape markets and protect economic interests. Knowing what are tariffs used for helps your business anticipate costs and make smarter decisions about sourcing, pricing, and growth.
Tariffs apply to goods entering a country through customs. Importers pay the fee before their products can move into the market, and that cost often passes along to businesses or consumers. Tariffs are most often applied as either ad valorem tariffs, which charge a percentage of the item’s value, or specific tariffs, which apply a fixed fee per unit, weight, or volume.
For example, a 10% ad valorem tariff on imported machinery raises the price in proportion to its value, while a $50 specific tariff on every imported appliance adds a set cost regardless of the item’s price. By understanding how tariffs are calculated and collected, you can better anticipate their effect on supply chains and overall expenses.
Yes, tariffs are indeed a form of tax, but they apply only to goods that cross international borders. Unlike income or sales taxes, which broadly affect individuals and businesses, tariffs target trade and protect local industries.
This means tariffs and taxes share a common purpose of raising revenue, yet they differ in scope. Taxes reach across every sector of the economy, while tariffs serve as a focused tool for trade policy. Recognizing this distinction helps you see how tariffs fit into the broader financial picture of doing business.
Businesses often confuse taxes and tariffs, but each plays a different role in shaping costs and compliance. Taxes apply broadly across income, sales, and corporate activities, while tariffs apply only to goods crossing international borders. Recognizing the difference helps you plan for both routine obligations and the added expenses of global trade.
| Taxes | Tariffs | |
| What are they? | Mandatory charges collected by governments on income, sales, or business activities. | Fees placed on imported or exported goods by a government. |
| Where do they apply? | Applies broadly to individuals, companies, and transactions within an economy. | Applies specifically to international trade and cross-border goods. |
| What is their purpose? | Funds government programs, infrastructure, and public services. | Protects domestic industries, balances trade, and generates revenue. |
| What are some examples? | Income tax, corporate tax, payroll tax, sales tax, property tax. | Tax, property tax. Ad valorem tariffs (percentage-based) and specific tariffs (fixed-fee). |
| What is their impact? | Affects profitability, pricing, payroll, and compliance across all sectors. | Raises costs of imported goods, influences sourcing, and shapes supply chain decisions. |
Understanding the main differences between taxes and tariffs ensures your business can accurately account for both. Taxes form part of your ongoing operations, while tariffs create additional costs that may affect pricing and competitiveness in industries exposed to global markets.
Both taxes and tariffs shape how businesses operate, from everyday cash flow to long-term strategy. Taxes affect nearly every company, while tariffs create specific challenges for businesses engaged in international trade. Together, they influence profitability, pricing, and growth planning.
Taxes directly affect profitability, cash flow, and the resources you have to reinvest in growth. Payroll taxes, sales taxes, and corporate income taxes all represent recurring obligations that require careful planning. When businesses mismanage these responsibilities, they risk penalties and disruptions that can undermine financial stability.
Working with a trusted advisor ensures you comply with changing regulations while uncovering opportunities to reduce liabilities. Explore our tax services to see how proactive strategies can strengthen your financial position.
Tariffs raise the cost of imported goods, which can ripple across entire supply chains. Higher expenses often force businesses to adjust pricing, change sourcing strategies, or absorb costs that reduce margins. For example, manufacturing companies importing raw materials may face higher production costs, while logistics providers must adapt to shifting trade routes or delivery schedules.
By anticipating these challenges, businesses can identify cost-saving alternatives and stay competitive. Learn how our manufacturing accounting services support companies navigating tariff-driven disruptions in global trade.
Calculating taxes and tariffs follows very different rules. Taxes are tied to income, sales, or payroll, while tariffs apply only to imported goods and are collected at customs. The tables below show how each is typically calculated.
Common Business Taxes
| Type | How It's Calculated | Example |
| Income Tax | Percentage of net profits | 21% corporate tax on $500,000 profit = $105,000 |
| Sales Tax | Percentage of the sales price | 7% tax on a $1,000 sale = $70 |
| Payroll Tax | Based on employee wages and contributions | Employer pays Social Security/Medicare on staff payroll |
Common Tariffs
| Type | How It's Calculated | Example |
| Ad Valorem Tariff | Percentage of the declared value of imported goods | 5% tariff on $200,000 of electronics = $10,000 |
| Specific Tariff | Fixed fee per unit, weight, or volume | $100 tariff on each imported vehicle = $10,000 for 100 cars |
Because these calculations can quickly become complex, especially when multiple jurisdictions or international trade rules apply, professional accounting support helps you avoid errors, penalties, and missed opportunities to reduce costs.
You cannot control government policies, but you can control how your business responds. Use the strategies below to manage costs, stay compliant, and turn taxes and tariffs into opportunities for smarter decision-making.
Tax laws are constantly evolving, and even small changes can affect your bottom line. To stay ahead, businesses should:
When you plan ahead, you lower your risk and free up resources to grow your business.
Tariffs add costs that ripple across supply chains, but you can take steps to reduce their impact:
Freight, shipping, and logistics companies face these pressures every day. Explore our transportation and logistics accounting services to develop strategies that keep your business moving forward.
There’s a lot of value in working with accountants who specialize in your industry to uncover savings and build strategies that fit your business. Sector-specific guidance can turn tax and tariff challenges into opportunities for stronger performance, for example:
Partner with advisors who know your industry and apply strategies designed to maximize results. Explore our construction accounting services to put specialized expertise to work for your business.
Managing taxes and tariffs requires more than basic compliance. Manufacturers, trucking companies, and construction firms face specific pressures that affect costs and competitiveness. Accountants with industry expertise identify risks, uncover savings, and guide you through changing policies.
At Porte Brown, we work directly with you to simplify complexity, strengthen compliance, and design strategies that fit your goals. Explore our outsourced accounting services and put expert support to work for your business.
Yes, you can usually deduct tariffs as part of your cost of goods sold or operating expenses. When you work with us, we help you apply these deductions correctly so you reduce your tax burden while staying compliant.
No, tariffs are mandatory charges on imported goods, and businesses must record them as expenses. We guide you in handling these costs properly so they don’t create surprises in your financial planning.
Yes, if you import goods, you must pay tariffs regardless of your company’s size. We help small businesses prepare for these expenses, adjust pricing strategies, and protect margins in competitive markets.