Tariffs are taxes on you and me, not on China

Tom Camfield
Blogger
Posted 5/22/19

AS NEAR AS I CAN FIGURE IT, our president still can’t see the forest for the trees when it comes to the matter of tariffs. Surely he can’t just be trying to con the public with a fake, …

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Tariffs are taxes on you and me, not on China

Posted

AS NEAR AS I CAN FIGURE IT, our president still can’t see the forest for the trees when it comes to the matter of tariffs. Surely he can’t just be trying to con the public with a fake, alternate version of reality. Like who’s actually paying the tariffs and who is paying the consequences in other ways.

An Associated Press story Friday noted that “in 2017, the last year before vicious trade disputes broke out, nearly a third of the state’s [Washington’s] agriculture output, worth nearly $7 billion, was sold abroad. Already, tariffs imposed by China, Mexico and other unhappy trading partners, have cost Washington State producers many tens of millions of dollars in lost exports of everything from cherries and salmon, to wheat, apples and potatoes . . . These loses will increase when China’s latest series of tariff increases goes into effect next month.”

https://www.seattletimes.com/business/international-trade/french-fries-sweet-cherries-and-chinese-tariffs-washington-exporters-brace-for-next-phase-in-trade-war/

Donald makes a lot of noise about making us all rich by “winning” against the Chinese. Actually tariffs on Chinese imports are just another form of taxation on American citizens that puts money into the U. S. Treasury, where I cynically presume (based on past observation of Trump administration chicanery) it will eventually be budgeted by some sort of sleight-of-hand into the military-industrial complex.

Let’s suppose I’m one of numerous moderate-sized manufacturers using in my products a couple of types of widgets, for the various sorts of which China is the world’s leading manufacturer. This country hasn’t been inspired to try competing in making widgets, due largely to production expense (especially wages) that would push the cost well beyond buying from China. Thus we won’t be “making them here at home” via some magic-wand vision by Donald.

So I order $100,000 worth from Bejing and Donald has put a 25% tariff on them. In settling accounts on their arrival, I pay the tariff and dish out a total of $125,000 for the widgets. U. S. Customs and Border Protection agents are standing by to rake off the extra $25,000, which goes into the U. S. Treasury. Isn’t that all exactly the same as a heavy federal tax on my business?

So I pass the extra cost along to my customers after incorporating the widgets into my products. And we all in the process also would be doing our bit to increase inflation a little. And the $25,000 goes into whatever slush fund the Trump administration has standing by, possibly something actually connected to “border protection,” such as a wall along the Rio Grande.

Obviously, the tariff is a lose-lose situation. U. S. business pays the freight and Chinese manufacturers may see their salesdrop off a bit—although it’s not likely that U. S. users can find some small country not yet insulted by Donald that actually makes, of all things, widgets at a price anywhere competitive with China’s.

China, meanwhile, retaliates by putting tariffs on U.S. soybeans and other farm products, which Chinese distributors then find cheaper to buy from other sources—such as perhaps Mexico or Canada. U. S. farmers wind up plowing under part of a fall crop. The government pays them reparations (also passed on to American taxpayers), but even so our farmers are losing their markets and may never fully retrieve them. And their farms cease to be fully operational. Jobs well could be lost in all directions.

It’s true that as I write this that Donald is negotiating a new version of the North American Free Trade Agreement (NAFTA) in a way that would lift his latest tariffs on Canada and Mexico—and theirs on us—but China remains as an elephant in the room.

According to an Associated Press story, “Including China tariffs and other duties Trump has imposed on items such as steel, American businesses and consumers were paying $3 billion a month in higher import taxes by the end of last year” (a March study by economists from the Federal Reserve Bank, Columbia and Princeton Universities).

Interestingly, in 2002, President George W. Bush’s administration placed tariffs on imported steel. A study financed by steel-consuming businesses found that the tariffs cost 200,000 American jobs that year.

Have I misunderstood something through all of this? Will Farm Belt voters remain stubbornly loyal to Donald? Is bankruptcy veteran Donald just plain simple-minded? Are we heading for another major recession? Will Americans with savings in the stock market be taking another big hit as it did at the end of the Bush administration?

Don’t ask me. I can only tell you how the vacillating machinations of Deranged Donald look to me. It’s almost as if he’s using some sort convoluted pyramid scheme in an effort to keep figures dealing with the economy and employment looking good up to election day 2020.

In just what conceivable way is all this “making America great again”?

NOTE: The World Trade Organization (WTO) is the international organization whose primary purpose is to open trade for the benefit of all It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. The U. S. has been a member since January 1, 1995. There are 162 member countries. China has been a member since 2001. I’m surprised not to be seeing much mention of WTO these days. But then, Donald Trump is not one to recognize multi-lateral agreements. He’s gotta be a one-man show, with “America First” and everyone else “losers.”

Comments

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Justin Hale

Every President can use the Tariff laws as they see fit, Obama did, so has Trump. I don't hear any suggestions from the Democrats or Trump haters on how to deal with China and their un-fair trade practices. And don't buy cheap krap from China, find a product made elsewhere or rethink your project. Just heard that Trump is asking 16B. for aid to American farmers.

Thursday, May 23
Tom Camfield

Yeah. $16,000,000,000 aid to farmers. Just another cost to American taxpayers for Donald's heavy-handed arrogance in the use of tariffs. That 26 billion could have covered a goodly number of very needy domestic social programs for quite a long time.. That's 16,000 millions. Of course it takes a lot to cover Donald's butt.

Friday, May 24