Making financial education relevant: How to explain current topics like tariffs to young children

Finding it difficult to avoid all the news on tariffs? Chances are your children are absorbing some of this too! International trade, business, and tariffs might sound like complicated topics for young children, but they play a big role in the prices we see in shops every day. While financial news can be tricky to understand, explaining concepts like tariffs to children is important because it helps them apply what they know to the real world.

We recommend introducing concepts like tariffs and trade when children reach the age of 8 or 9. Keep reading for tips on how you can break it down in a way that makes sense to them.

For help on talking to younger children about money, check out our Milo’s Magazines.

Tell a familiar story

Children learn best when they can relate new ideas to things they already know. Here is a story that can help explain how tariffs work in a simple and familiar way.

Imagine you own a sweet shop and sell chocolate bars for £1 each. Then, another child from a different town starts selling the same chocolate for 80p. Because it’s cheaper, all your friends start buying from them instead of you. To help you, the local council decides that anyone from outside your town who wants to sell chocolate must pay a fee of 30p per bar. Now, their chocolate costs £1.10 instead of 80p, making yours the cheaper option again.

Your town has a sweetshop. It sells two kinds of chocolate bars. One is made in your town by Ms Tony and costs £1. The second chocolate bar is made in a different town. They are sold for 80p. Most of the people in the town buy the chocolate bars that cost 80p because they are cheaper.

The town wants to help Ms Tony sell more chocolate bars because she is local. To help her, the local council decides that anyone from outside your town who wants to sell chocolate must pay a fee of 30p per bar. Now the sweetshop still sells Ms Tony’s chocolate bars for £1 but the chocolate from the other town costs £1.10.

Ms Tony sells more chocolate bars because hers have become the cheapest. Chocolate in the town is now more expensive than it was before. It is also harder and more expensive for the out of town company to sell their chocolate bars in your town.

Keep It Simple and Clear

Avoid complicated language when explaining tariffs, and break concepts down into clear, simple language that makes it easier for children to follow.

For example, you could say: A tariff is a special tax that makes things from other places more expensive, so local businesses can win more customers and make more money.

Make It Visual – or Role Play!

If a child can see how tariffs work, they’re more likely to understand. Try using real objects:

• Get two types of sweets, one from a local shop and one from an imported brand.

• Pretend to be a shopkeeper and sell them at different prices. Explain that the local sweet costs £1 and the imported sweet costs 80p.

• Ask your child which sweet they would buy. Have a conversation about why they made that choice.

• Then, introduce a “tariff” by adding an extra fee to the imported sweet. Now, it costs £1.10

• Ask your child which sweet they would buy now. Talk about why the fee did or did not change their choice.

This role-play approach makes the concept of tariffs more relatable and fun.

Encourage Questions

Children are naturally curious, so let them ask questions! If they wonder why some things are cheaper in one place and more expensive in another, use that as a way to explain trade and tariffs.

If they ask, “Why don’t we just buy the cheapest chocolate to save more money?” you could say:

“Buying from the cheapest place can help people save money and can support people making chocolates overseas who need to make money too. But on the other hand, if we always buy the cheapest one, local businesses might struggle to compete and could close down. Tariffs are sometimes used to support local businesses, but they can also make things more expensive for shoppers.”

By answering their questions simply, they can better understand the reasons behind tariffs.

At JFF, we know it’s never too early for children to start building financial knowledge and confidence. They are absorbing news and information all the time – whether we are aware of it or not! By using stories, practical activities, and everyday examples, you can help them understand how complicated concepts like tariffs affect the world around them.