Why License Barriers Are Disruptive To Consumers, Just Like Tariffs

If a new coffee maker from overseas costs $100, by the time it reaches store shelves the price will probably be closer to $120. The extra money isn't for better materials or features, it's the cost of companies importing goods. This is primarily how consumers are affected by import licensing. While not every imported good requires licenses, many items — electronics, food, and medical supplies — must ultimately pass legal and safety standards before they can be sold. While these standards keep products safe and maintain quality, consumers often ultimately foot the bill.

In the U.S., the cost of getting an import license depends on what is being brought in, which, in some cases, can be prohibitive. For medical equipment or certain agricultural products, companies might have to pay fees for permits and certifications from agencies like the U.S. Food and Drug Administration (FDA) and/or the U.S. Department of Agriculture (USDA). For goods over $2500, companies also need a customs bond or contract ensuring they will pay the government their owed taxes, customs, and duties. Plus, companies might even need a customs broker to help manage paperwork, taxes and duties, and rule adherence for imported goods. They can also be useful when determining if goods are subject to import quotas or tariffs (and how to tell the difference). All of this goes into the cost of the product you see on a store shelf.

Getting a license to import goods is a significant challenge for businesses, especially small ones. It makes things cost more, takes longer to get products, and piles on extra paperwork. These licenses can makes products cost more, delay products altogether, and even pile on extra paperwork. Since many small businesses may not have an in-house compliance teams, they must also pay for legal help. This can not only push their costs even higher — directly affecting consumers — but it can also lead to a greater failure rate for small businesses in certain industries.

Licensing rules and tariffs on steel and aluminum imports threaten to push up production costs for U.S. car makers, which will mean even higher prices for vehicles. Similarly, according to Kelley Blue Book, steel tariffs alone could raise the price of the average car by as much as $3,000 depending on how much of these increased costs are ultimately passed onto consumers.

In addition to increased costs, import rules — and their resulting extra fees — can make products less accessible to consumers. This can be especially true for medications. For instance, President Trump has already announced his intention to add a 25% tariff on pharmaceutical imports. Since almost half of all prescriptions for generic medicines in the entire U.S. are supplied by Indian companies, these tariffs would significantly impact your prescription medication prices — making them less accessible to the consumers who might need them most.

Just like with medicines, import rules and fees on imported foods can make those items harder to find, which can be particularly difficult for consumers to navigate. Among the top food items that could face increased scarcity is dairy. This is especially troubling when you consider that the USDA forecasted that the U.S. would import $28.7 billion worth of dairy products during fiscal year 2024. Dairy products already have special regulations known as Tariff-Rate Quotas (TRQs), meaning that importers need to get special permits (which must be applied for annually) from the USDA in order to enjoy a lower tax rate on their imported goods. While it's important to ensure quality when it comes to food products, prohibitive hoops and costs can ultimately make it less attractive for businesses to import certain goods — meaning fewer choices for consumers.