A Whackadoodle Extra: Tariffs!? Why we should be discussing them now without hysterics.
A Whackadoodle lesson in how tariffs can work when done right, their role in American history, and why we should be discussing them now without hysterics.
I received an unusually cold stare as my student brushed pass me on her way to our usual study table, a.k.a. my dinning room table. Her stare was followed by a soft mutter, “I should never have let you talk me into taking economics. It’s gonna ruin my grade point average.”
“Sorry,” I said moving to join her. “I thought you’d prefer it to trigonometry, or calculous. You do need a math credit,” I reminded her.
“Ugh,” she replied with a huff, and slammed down her book bag so sharply that the table shuddered. “It wouldn’t be so bad if the professor spoke more English. I swear, he memorizes his lectures the night before because whenever anybody asks a question, he just repeats exactly what he just said. I mean, if we didn’t understand it the fist time he said it, how is repeating the same thing gonna help?” She began to shovel her books out of the bag and fan them across the table.
“So what’s the topic of distaste?”
“Tariffs,” she spat the word out with as much contempt as she could muster. “I suppose I can understand why he wants us to learn about them. I mean, with all the talk about Trump wanting to impose like a 20% tariffs across the board, and all these economist yelling how that will cause a recession.” She looked from her books to me. “You know, I don’t really even understand what a recession is,” she admitted. “I know it’s supposed to be bad, but,” she finished the sentence with a shrug.
“A recession is just a fancy word for a period of time in which there’s a significant decline in economic activity lasting more than a few months. It’s usually indicates a decrease in GDP, a fall in people’s income, increased unemployment levels, reduced industrial production, and a reduction in wholesale-retail sales.”
Her face kind of cringed as she asked, “What’s GDP again?”
“Grose Domestic Product,” I replied. “Basically, the total market value of all the finished goods and services produced within a country’s borders in a specific time period, usually calculated annually.”
“And tariffs affect that?”
“Sure, if imported goods cost more, it becomes more expensive to produce goods here, unless a country make those good themselves, so their citizens don’t have to pay tariffs on them. The cost of the tariffs gets passed on to the consumers. Prices go up. Spending goes down. Profits fall. Companies stop expanding. Jobs get scarce. People start getting laid off. So yeah, recessions are bad and to be avoided.”
“So tariffs are bad.”
“Not necessarily. Imposed with precision, tariffs can raise government revenue, as well as protect a county's industries and consumers. Heck, tariffs can even be used to protect national interests. However, 20% across the board tariffs is not what I’d call imposing them with precision.”
She started down at her unopened books. “Don’t laugh or get mad when I ask this, because I think I know the answer. I just want to be sure.”
“I promise not to laugh or get mad.”
“Who exactly pays the tariffs?” she asked weakly. “Cause, I’m hearing different things from different people.”
“Tariffs are paid by the importer when they import good into a country, not by the county exporting them.”
“So the Chinese aren’t paying them?”
“The only tariffs the Chinese pay are the tariffs imposed by their country on their imports. They certainly don’t pay for the tariffs other countries impose on their goods.”
“So why impose tariffs at all,” she covered her face, wailing.
“Like, I said, if used judiciously, tariffs can solve a lot of problems and keep a nations wealth inside its boarders instead of spread out across the world.”
“Huh?” She stared at me blankly through a gap in her fingers.
“Tell you what,” I said, reaching for my iPhone. “Thom Hartmann recently wrote an excellent article on Tariffs. I dare you to read it and still have questions about how and when they’re useful.” I searched through my e-mails until I found the link. “Here, read this while I make you tea and me coffee.” I shoved the iPhone into her hands and stood up. “And here is something else to think about as you read,” added from over my shoulder as I headed for the kettle. “That iPhone has components only made in China. So, across the board tariffs will raise the price of that phone and a lot of other things that use components that we don’t or can’t make locally.” I glanced back, starting to say more, but she was already reading.
So I will leave you with what I would have told her.
If you are tired of people talking politics, just skip on down to the first bold paragraph which reads, “So, let’s examine how tariffs can work when done right, their role in American history, and why we should be discussing them now without hysterics.”
I do hope that you will read Thom Hartmann’s article. The topic of tariffs is well worth some historical perspective, especially during these controversial times.
I’m the Dad Lynn refers to. I new that tariffs are a tax on imported, but tarrifs have been so much in the news lately, so I asked Lynn to explain how tarifs sffwct American citizens. A few minutes later she sent me the link to the article she reference in her article.
what I learned from the article: An across the board tarriff on all products coming from a partular country. Often start tradde wars. Targeted Tarriffs used to keep Anerican indusry competitive have been used since the United States became a country.
When conservqtives started promoting free trade america manufctuing was shiped overseas. The reult was the rust belt as the core oof Americawent bankrupt.