Thursday, May 9, 2019

A word about a really boring topic-International trade tariffs.

I heard Trump make a statement the other day that added more evidence to the assertion that he's either a liar or profoundly ignorant.  (The truth is probably a lot of both.)  Anyway the statement was something to the effect that the tariffs he's levied against China has added billions of dollars to American coffers.  That statement is absolutely false.   Here's why.

 First, to put it in the simplest possible terms, a tariff is basically a tax a country places on imported goods the purpose of which is supposedly to level the trade playing field.  The end result is that the goods sold by that country's manufacturers cost more thus resulting in American buyers turning to domestic products.  Remember, that's the theory.  It rarely works that well.

OK, so if the country the tariff is against isn't paying the tariff, who is?  The answer is the producer of the goods being shipped from that country.  The importing American country is now paying a higher price but rather than turn to domestic manufacturers they simply pass the cost on to....YOU!  Yes, folks. That's right. You're the one paying for Trump's clever trade policies. 

Why aren't people on to him?  How has he and others like him gotten away with it?  For two reasons. First, no one fully understands how international trade works so they take it as an article of faith that someone somewhere knows what they're doing.  Second, sometimes, done correctly, tariffs do in fact work.  But it's the result of careful negotiation requiring countries to compromise and practice give and take-something Trump can't or won't do.  He thinks he can sit down with China or India or Japan or whoever and dictate policy like he used to do in his board room.  The problem is our trade partners will simply leave the table laughing historically leaving the U.S. high and dry.

The solution is reasonable, respectful negotiation-not a 300 pound 2-year-old throwing a temper tantrum. 

Remember all of this the next time you vote!

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