To be clear, the recent tariffs imposed by POTUS Donald Trump will not help American taxpayers in the main. In fact, tariffs will distinctly hurt Black citizens in particular, since we tend to have less money overall and really far less to waste. While we may not be completely sure who voted for whom, for those who did sneak a Trump vote in, you voted to hurt yourself not help yourself.
To begin with: What exactly is a tariff, and what difference does it make in one’s economic life (i.e., shopping, selling, everyday survival, etc.) Secondly, according to current economic definitions, a tariff is a tax levied on an imported good.
Essentially, there are two basic types of tariffs: (1)it is a tax levied as a fixed charge for each unit of a trade good that is imported into a country, in this case, traded into the U.S. For example, a tariff would be a tax on imported automobiles, as a proportion of the identified value of those automobiles. Secondly, a tariff is also a way of trying to protect a country’s own products from competition in pricing. When one wants to maintain the value (price) of a product, one may tax a competing similar product so that the competing product costs more in the marketplace—thereby benefiting one’s own product. Taxing foreign automobiles, for example, may mean you can lower the price on domestically produced cars in the same class.
Tariffs are a tax on a imported good or commodity. To be clear, in general, the tax is not paid by the owner of the commodity or imported product. The tax is paid by whoever receives the shipment at the port, and if sold in the marketplace, by the consumer. For Chinese automobiles that are sent to be sold in America, it is the auto company that receives the shipment that regularly would pay the tax or tariff on the product, and thereby add that amount to the price of the automobile or other product sold to American customers. In other words, the consumer ultimately pays the tariff tax.
The tariff only hurts the manufacturer and country sending the product—e.g., a new automobile—by the receiver’s having to raise the price of the automobile sold in this country so that the American buyer has to pay more for it than a competing American automobile.
When a country is relatively poor, with few products to sell, raising the price of competing items may help the country to grow, temporarily (in America’s early days, tariffs helped the country make money and grow since it had few products in the international marketplace, mostly products from slave labor). But when one country puts tariffs on imports, other countries most frequently place their own tariffs on that country’s products being imported. So in America’s current multi-product, very rich state, tariffs are a fool’s choice. When the U.S. puts a tariff on another countries’ products coming into the U.S., other countries put tariffs on America’s products being sold in those countries. Assigning tariffs in the modern world is usually not common sensible economic strategy. What it does is inevitably start trade wars with other countries, and simultaneously hurt manufacturing and trade in one’s own country. Eventually, those watching will begin to see economic regression in America’s stock market because of tariffs.
Tariffs are, in the parlance of most economists, a stupid idea that will surely engender a tit-for-tat negativity from countries on whose products we place a tariff, and guarantee retaliatory action from those countries. It becomes a needless trade war that only begats grievance and invective all around. It wins nothing but enmity. It surely will not help either our manufacturing or labor markets.
Mr. Trump oftens brags about having earned a degree at Wharton School of Economics. Never mind that that is another one of his lies. He graduated from the University of Pennsylvania. Wharton is a graduate school at UPenn but Mr Trump was not admitted to, nor did he graduate from any graduate school that researchers have been able to discover. Even if he had, his teachers would have told him the information above. Tariffs are negative and don’t help a large economy. Tariffs start trade wars and they don’t help countries already doing well.
Tariffs are a very old trade policy instrument, with their use dating back to at least the 18th century. Historically, the main objective of a tariff has been to raise revenue. In fact, before ratifying the U.S. 16th Amendment (1913) and formally creating the personal income tax (which generates most modern U.S. revenue), the U.S. government raised most of its revenue from tariffs. But that was then.
The negativity engendered recently by Mr. Trump trying to be “bad,” to show himself as a great boon for the American economy is very likely to hurt the American economy, currently the dominant economy in the world, and raise consumer prices in the marketplace needlessly and recklessly.
It is usually very bad to have a leader transfixed on trying to show how smart he is, instead of working hard to help the people who elected him. He may or may not have been good in real estate (the state of New York may have the ultimate decision on that), but it is almost a certainty that he will get egg on his face if he continues to impose more tariffs on America’s trading partners. This is not a gunfight he can or will win. That means ultimately we, the American people, will be ill-served and economically harmed in the backfire.
Professor David L. Horne is founder and executive director of PAPPEI, the Pan African Public Policy and Ethical Institute, which is a new 501(c)(3) pending community-based organization or non-governmental organization (NGO). It is the stepparent organization for the California Black Think Tank which still operates and which meets every fourth Friday.
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