Carnes: When it looks like a duck
No matter how you try to spin it, a tariff is a tax.
Tariffs are nothing more than taxes paid by individual consumers in the form of higher prices for products made outside of one’s country.
Easy to understand, right?
In a completely hypothetical situation, suppose you want to purchase one of the unofficial MAGA hats sold at Walmart.
Walmart pays China $10 for the hat and then charges you, Joe American Consumer, $11. Not much of a markup, but hey, we’re talking Wally World here.
With Trump’s new proposed 25% tariff, Walmart now pays $12.50 for the hat. Using the same markup, you now pay $13.75.
China still gets its $10, Walmart makes an extra 25 cents and you, Joe, now pay an extra $2.75 for the same silly hat.
Short and sweet, that’s how tariffs work.
Yes, the same man who last week wished Japan a “Happy Memorial Day” — a day in which the United States honors our fallen soldiers, including the 111,606 killed by the Japanese — continues to insist that tariffs are paid for by the exporting country, not American consumers.
This poor, poor little uneducated man-child.
Dear Leader’s blustery gamble with Mexico over immigration, in which he would impose a 5% tariff on all goods entering from Mexico unless it prohibits the flow of illegal immigration to the United States, is taking cognitive dissonance to a whole new level.
White House officials have failed to explain how driving up the costs of Mexican goods would stop the flow of migrants, but I’m pretty sure it follows the same logic of Vail Resorts threatening snowboarders that they’re going to charge skiers more to ski if more snowboarders continue to show up on the mountain.
Welcome to TrumpLogic 101, where bankrupting farmers to give them welfare apparently wins trade wars.
This strategy of pressuring competing nations to submit to his demands, wielding threats, insults and punishments — or else — is apparently based on the notion that Americans will stop purchasing goods from China and Mexico, and thus in the long run … MAGA?
While this might look somewhat feasible on very thin paper, when was the last time you looked for “country of origin” when buying car parts, shoes or a new TV?
The goal is to lower our trade deficits with these countries because both China and Mexico sell us a lot more stuff than they buy from us. While I applaud the objective, driving up the costs of Mexican goods to stem the flow of migrants across our border could conceivably hurt the Mexican economy to the point that even more of Mexico’s citizens try to cross the border in search of a better future.
With our largest trade deficit since the financial crisis of 2008 and the largest budget deficit in U.S. history, far too many are guilty of believing this archaic, macho, tough guy approach to trade issues has any actual teeth.
- 2016 — “Health care is so easy!”
- 2017 — “Who knew health care could be so complicated?”
- 2018 — “Trade wars are easy to win!”
- 2019 — “Who knew trade wars were so complicated?”
We did, Donald, we all did.
Richard Carnes, of Avon, writes weekly. He can be reached at email@example.com.