Tariffs = Taxes

Spectator

By Stephen Tuttle | Oct. 12, 2024

When he isn’t telling outrageous lies about the Hurricane Helene relief efforts, and we’ll have an aside about that later, Donald Trump likes to brag about his tariffs. At one point, he even said he’s the only president to have ever put a tariff on imported Chinese goods, and he often mistakenly says the exporting company will pay.

He has claimed variously he will impose tariffs of 10 percent on all imported goods and 20 percent on imports from China—he recently increased that to 60 percent. He’d like a 100 percent tariff on goods from any country unwilling to accept the U.S. dollar for international trade and a 200 percent tariff on any vehicles manufactured in Mexico.

Nearly all of Trump’s tariff bravado is wrong, including the overriding idea that a president can impose tariffs at all. The U.S. Constitution gives Congress the authority to regulate trade with foreign countries and to “lay and collect duties,” prevents individual states from creating their own duties or tariffs, and gives Congress the authority to create trade agreements.

(In some limited circumstances, the president may slightly alter tariffs while negotiating trade agreements in an effort to reduce the tariffs other countries may be laying on imported American products. What the president cannot do is unilaterally establish new tariffs absent Congressional approval.)

Tariffs are typically imposed to combat what we perceive as unfair competition on foreign products heavily subsidized by their governments. We placed serious tariffs on Japanese steel when we believed they were “dumping” their subsidized product on our market, and we’ve done so with a variety of other products. (And we should be doing so with subsidized tart cherries from Turkey.) We might also do so in the name of national security, to level the marketplace playing field, or to stop the import of products created through the theft of U.S. intellectual property.

Approval from Congress on tariffs that would cost American taxpayers somewhere between $1,900 and $3,900, according to the Tax Foundation, would be exceptionally unlikely. Tariffs in the 60-200 percent range are political impossibilities. We taxpayers pay for tariffs every time we buy an imported product, and a quick look at our electronics, shoes, clothes, dishware, pots and pans, and much of everything else we buy and use means we’d be paying more for just about everything with Trump’s tariffs.

There aren’t many alternatives to higher prices. Either the importing company simply absorbs the cost of the tariff with no noticeable impact on consumers, or the exporting company reduces the wholesale cost of their goods so the retail price remains relatively stable. A more likely and typical result is U.S. consumers bear the burden of import tariffs. What does not happen, despite what the former president claims, is that the exporting company pays the cost of the tariffs.

It’s not as if tariffs are something new; we started this a long time ago. The Tariff Act of 1789, which added a 5 percent tariff to almost everything imported, was the second bill George Washington ever signed. Not only is Trump not the first to lay tariffs on China as he claims, China was, along with India, the very first target of U.S. tariffs, slapping a per pound duty on silk and other fabrics. Those tariffs were less to protect American products than they were to add some much needed cash to our dwindling treasury. In fact, we’ve been imposing tariffs on Chinese products fairly regularly from the late 18th century on.

We already put tariffs on about half of all imported industrial products adding to the cost of production and distribution. Additional Tax Foundation numbers indicated we collected about $80 billion in tariffs from various sources last year. That only represented about 2 percent of total revenues but it did add up to an additional annual cost for goods of about $625 per U.S. household.

Tariffs are a useful, constitutionally authorized tool when judiciously approved by Congress. They cannot be unilaterally imposed by a power-hungry president who doesn’t understand who will be paying the cost.

Now, about those Hurricane Helene relief effort lies being promulgated by Trump and some of his allies.

Relief supplies are NOT being diverted to immigrants. Relief is NOT being denied to heavily Republican areas. The North Carolina Air National Guard was NOT told to stand down rather than fly rescue missions. There’s been more of what are outrageous insults to the thousands of people working tirelessly in punishing conditions to help individuals and entire communities. The North Carolina National Guard has flown nearly 200 rescue missions working with more than 1,600 military and civilian personnel to find victims.

By the time you read this, Hurricane Milton will have slammed into Florida and another round of rescues and relief will be underway. Everyone at the federal, state, and local levels should leave politics behind and just help.