Who Pays for Tariffs Explained by the Shirt Off Your Back. Whether you are a fan of tariffs or not, it could be useful to discuss how they influence the price you pay for some simple item, like for instance, an inexpensive polo shirt. First, we need to know something about calculating retail prices. If you don’t give a damn about calculating retail prices, skip the next four paragraphs*. *Retailers usually determine the retail price of something they sell in terms of the markup , which is the amount added to their cost for the item. That markup is usually expressed as a percentage, and a common markup for items such as polo shirts is 40%. However, the base for that percentage markup should NOT be the cost of the item. Rather, it is almost always the selling price. Here’s why: *Suppose a seller’s cost for a package of underwear is $6.00 and he bases his 40% markup on his $6.00 cost. Calculating 40% of $6.00 produces 40% X $6.00 = $2.40. Add the $2.40 to $6.00: $2.40 + $6.00