What is a tariff?

A tariff is a tax imposed by a government on certain imported or exported goods. They’re used to regulate trade between countries, protect local industries from foreign competition, and generate revenue for governments.

Tariffs are also used as political tools to exert influence over other countries. For example, in 2022, the Australian Government put a 35% tariff on all imports from Russia and Belarus in retaliation for the invasion of Ukraine.¹

While recent tariff talks have gotten tough with the US threatening – and introducing – fresh tariffs on major trading partners, tariffs themselves are far from new. 

In ancient Greece, city-states often slapped duties on goods entering their ports. Similarly, the Roman Empire used tariffs to raise funds and control trade across its vast territories.

When it comes to pinching pennies or exerting political pressure, tariffs have a long history. 

How do tariffs work, and who pays them?

Tariffs are an added cost placed on importing or exporting specific goods and services. 

For example, if Australia wanted to protect or stimulate the local television manufacturing industry, the government might put a 15% tariff on the import of all foreign-made TVs. 

This means any local business importing a foreign-made television worth $1,000 would pay an extra $150 to the government (15% of $1,000). 

But the buck doesn’t stop there.

The cost of the tariff is almost always kicked on to the consumer — you. 

So, the foreign-made TV that cost $1,000 last week now costs $1,150.

Are tariffs bad?

Like most economic policies, it depends on who you ask and how it affects you. 

In our TV example, if you’re a struggling uni student looking for a cheap widescreen TV, tariffs mean you pay more for goods.

However, if you’re a local TV manufacturer trying to compete against foreign companies that can produce goods at a lower cost, tariffs can help level the playing field and attract more business. 

How do tariffs affect your super?

Because tariffs directly affect global trade, they can indirectly affect your retirement savings. This includes:

• Market volatility — tariffs can lead to increased market volatility as investors react to changes in trade policies and potential economic impacts. Find out what volatility means for your super. 
• Industry impacts — certain industries, such as manufacturing and technology, can be more susceptible to tariff impacts. Higher costs for imported materials can reduce their profitability and, in turn, their value.
• Inflation — tariffs increase the cost of imported goods, which can contribute to inflation. Inflation erodes the buying power of retirement savings over time.
• Economic growth — widespread tariffs can slow down global trade and economic growth. This can negatively impact corporate earnings and investment returns.

Should I be worried about tariffs affecting my super? 

In short, no. Despite recent tariff tough talk, your super is well-placed to ride the bumps of tariff-induced volatility.

Super is a long-term investment, and we take a long-term approach to growing and protecting it. We employ strategies to reduce the impact of negative returns when markets fall while also positioning ourselves to recover losses when things pick up again. 

Importantly, we diversify our investments to reduce risk by spreading our investments across many asset types and markets. So, if one industry or region is tangled in tariff headwinds, we have other assets in other sectors that can continue to perform well.

It’s all about finding the right balance so your super gets a smooth ride — regardless of the latest international tariff stoush.

Get the right advice

Worried about your super investments? Our super experts are on hand to help you choose the right investment option for your specific goals. Book a call back from one of our super experts today.

¹ - https://www.foreignminister.gov.au/minister/marise-payne/media-release/australia-impose-tariff-increases-all-imports-russia