172. Tariffs Explained and Tariff Lies

15 May

JUST IN: Wall Street J. states that tariffs generally drag down ALL economies in the world, including ours. All markets have gone down. Trump’s tariff war with China is a poorly-planned  effort, which does not consider Chinese strengths and financial skills.

A tariff is a tax or duty to be paid on a particular class of imports (or exports). The tariff is paid by the importer. For example,  if we put a tariff on imports from China, the tariff  is paid by the US importer (not China). The tariff money does go to the US Treasury. So it is true that the US Gov does get increased income. I suspect that part of Trump’s need for tariffs is to make up for the disastrous loss of gov income due to wealthy tax giveaways.   Major blog points, below:

CHINA DOES NOT PAY TARIFFS IMPOSED BY USA
ALMOST ALL TARIFF COSTS ARE PASSED ON TO US CONSUMERS
ONLY CHINA CAN SUPPLY CERTAIN GOODS AT LOW COST
TARIFFS USUALLY RESULT IN MORE “TAX” FOR US CITIZENS

The Gov gets tariff money, but the US importer passes on the cost. The retailer, like Amazon or Walmart pays more for the product and so will pass that cost on to the customer. It is like an extra tax that WE pay.

Re US tariffs on Chinese goods, Trump says that you can get around the higher cost, by buying non-Chinese goods. The problem with that argument is that China has much lower prices than USA and other country’s manufacturers. Also, China provides us with special parts that would be difficult to find or develop elsewhere. So in the end, American customers will be paying more. The higher prices will decrease purchases and that will have a negative effect on our retailers and could cause general economic negatives. The trade war with China will be costly for our people and may well be  unsuccessful in its ultimate goal changing China policies.

Now let’s look at the other side: retaliatory tariff increases by the other country. In the case of China, every tariff imposed by Trump has a carefully targeted Chinese tariff imposed on our exports to them. If Chinese importers must pay a tariff then they are less likely to buy American products. This can negatively affect USA farmers and manufacturers. In fact, farmers and workers here are already suffering from the China tariffs.

The headline reads: “Soybean Farmer Loses From Retaliatory Tariffs With No Bailout Funds In Sight.”

The general fact is that Trump himself benefits from tariffs, but many US workers will suffer. Of course, the totally reliable Trump says he will pay the farmers for their losses (good luck to them). But won’t reimburse citizens for higher prices.

The Trump tariffs may have some positive effects (pure speculation) but there are already losses for the people. The China tariffs are an attack on China and the start of a trade war is not generally supported. And remember that China owns a lot of US debt. Tariff effects are complicated and can have negative effects on our citizens and on foreign respect for our government. Between trade wars and withdrawal from vital foreign agreements, who can trust the USA under Trump.  Also, I must bring up Trump’s withdrawal from the TPP (Pacific) trade agreement. This agreement was carefully developed under Obama to strengthen US trade relationships with Asian countries. Trump’s withdrawal has opened the door to China to become a leader in this world area. 

Trump and Republican tax law changes have resulted in a huge loss of revenue, which has promoted discussion of decreasing social programs like Medicare. Trump may like tariffs because they can make up for a little of the loss. It can be viewed as a further tax on the non-rich, so that the rich can have even more money.

Under Trump, there have been some improvements to our economy, but what is very important, many middle-class wages are stagnant and still very low.

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