It’s understandable that folks don’t understand international tariffs. Trump’s suggestion of a 10% tariff on all imported goods would be so enormously inflationary it cannot be allowed to occur. And he misleadingly says China is paying billions in tariffs.
They aren’t.
Folks, first, China pays nothing in tariffs. The tariff increase is passed on to you, the consumer, and you pay. Second, tariffs are essentially a sales tax, or consumption tax. The buyer pays. So Trump’s bragging about billions of dollars that China is paying is a flat-out lie, and so incompetent at a basic level.
China only suffers if the American consumer doesn’t buy their product; that is a decline in their market share. So Amazon or Walmart (importer) passes the tariff cost to the buyer. Amazon and Walmart then write the check to the Treasury, not China.
One unstudied kicker is how prices on American goods then were also jacked up to be more profitable. Trump’s 2018 tariffs on washing machines are an example. The Federal Reserve estimates that consumers paid 125% to 225% of the tariff. The padded profits cost consumers $1.5 billion. Bonuses were good. Really, tariffs cause U.S. companies to get greedy. Only a change in market share hurts China, Korea or Taiwan.
Of fatal concern is that no Republican can stand up and call Trump the idiot he is. He lives in a delusion.
— Mark Wohlgemuth
Anchorage
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