Op-Ed: What is a tariff? It's government's dirty, stupid secret.
“Tariff” is an ugly word. It’s not a cuss word or an insult, but it’s a government word, used mainly in capitols and legislatures.
If someone “puts a tariff on you,” it sounds like a hex. Fortunately, only presidents or Congress can impose tariffs. Think of tariffs as Washington voodoo.
A tariff is not a hex but a tax — or series of taxes — on what other nations try to sell to us. Politicians are not brave enough to call them tax hikes, but they are.
Tariffs are painful, like needle pricks. Naturally, foreign leaders want to fight back by sticking us with their own tariffs. This quickly leads to tariff wars that can spread like wildfire.
Tariffs are popular at first. We get lots of money from the tariffs that other countries pay. Why not take the money?
Also, we can benefit when the prices of imports rise by the amount of the tariff. American-made products look cheaper, so our sales increase. It’s fun hiding behind tariff walls.
ariffs seem good, so why not solve all of our problems that way? Developing nations are tempted to do just that. Advanced nations learned not to, however.
About 80 years ago (with the Smoot-Hawley tariffs), Americans realized that tariffs backfired, making the Great Depression worse. Tariffs start a race to the bottom, not the top.
How tariffs start a race to the bottom
First, Americans usually end up paying the tariffs because we can’t wean ourselves from imports. Tariffs end up taxing us, not foreigners. We pay the bill. Tariffs are boomerangs.
Second, businesses hiding behind tariff walls often conceal other things like inferior quality, low productivity, or waste. They rarely pass along their new profits to their workers.
Most important, tariffs are like drinking hard liquor. You are never as smart or good-looking as tariffs make you feel. You are just getting high, hungover, and hooked. Some people can hold their liquor, but people who brag about doing that are drunks.
Today’s tariff talk from the Trump Administration has already spread from eight tariffs to 20,000. Meanwhile, the world is retaliating. China, a notorious cheater on trade deals, is brazenly trying to reverse roles and replace traditional U.S. leadership in the world by reducing tariff barriers for its friends.
Democrats and Republicans are criticizing the president's policies
The Tennessee Farm Bureau and other Tennessee businesses know the value of low- or no-tariff trade. Virtually every Tennessee elected official, Democrat and Republican, is criticizing the Trump Administration’s belligerence on tariffs. Virtually every economist, liberal or conservative, agrees that tariffs are bad for America.
U.S. Sen. Bob Corker has been particularly critical of President Trump for taking power from Congress when he claims that he can unilaterally put a tariff on other countries for “national security.” President Trump’s tariffs are not about our security but his own personal insecurity.
The architect of President Trump’s tax cut legislation, Gary Cohn, says that Trump’s tariffs are already offsetting the benefits of the tax cuts. What the government gave with one hand, it is taking with the other. The Chairman of the Federal Reserve says that tariffs are already slowing the growth of our entire economy.
Tennessee is a world center of the automobile industry. Tariffs are expected to raise the cost of each car by $5,800. Our whiskey industry is specifically being targeted for retaliation by nations that want to send a message to Sen. Mitch McConnell from Kentucky. It’s hard to find one of our industries that will not be adversely affected by tariffs.
Let’s come to our senses and stop this madness before it gets out of control. Tariffs are bad news. They are not only ugly but stupid.
Op-Ed appeared in the Tennessean on July 26, 2018.