No Taxation Without Representation
The “Sons of Liberty” were some of the “up and coming” men of Boston. They were merchants and craftsmen, journalists and lawyers, and plenty of common workers. They believed that they were English citizens, with the right to representation in the legislature. But they had none, and resented taxes that were levied on them by the far-away British Parliament.
The most noxious tax for them, was the “tea tax,” a charge of ten percent on tea imported into Boston, and the rest of the American colonies. Like coffee in America today, tea was the drink of choice for most Americans in the 1700’s. This tax wasn’t charged directly to the consumer, but to the colonial merchants who received the tea on consignment from the British East India Company, the primary tea exporter.
But the merchants then, like merchants today, didn’t “absorb” the cost of the tax. They passed it onto the consumer.
In protest, the Sons of Liberty gathered at the Old South Meeting House on the night of December 16, 1773, and dressed in costumes resembling the Mohawk tribe. They went down to the harbor, boarded three ships, and dumped 342 chests of tea into the sea.
The current President of the United States has said he will impose $200 billion in tariff (tax) increases on Chinese goods starting on Friday. Best Buy, Apple, and Wal-Mart are not likely to “absorb” the cost, just as the merchants of 1773 didn’t absorb the tea tax. Like days of yore, the $200 billion will not be a tax on the Chinese, in the sense that they will be the ones who pay. If the tariffs are enacted, then it will be the American consumer that will pay the increased costs.
In the current Administration’s defense, China has been a unfaithful trading partner. They underpay their workers and subsidize their businesses with government funds. They also boldly steal intellectual property; ignoring American copyrights and patents by simply taking the plans and products, reverse engineering the processes, and make the goods themselves. They are not fair partners.
There are few in the business world who defend the Chinese trading practices. It is clearly time to “reset” the relationship. But Americans be warned: the “reset” is going to require Americans to suffer. The $200 billion will not come from Chinese coffers; it will come from our bank accounts.
In the long term, it might encourage Americans to purchase American made products rather than “made in China.” The problem: the vast majority of computer chips, electronic goods, and machinery come from China and are not made in the “good ol’ USA.” So if you want an IPhone, or a Sony television (components), you’re going to pay more.
And like any good trade war, don’t expect that China is going to accept their “punishment” without consequences. China will retaliate on US imports: aircraft (though they could probably get a good price on Boeing’s 737 Max’s right now,) optical and medical instruments, and agricultural goods. China buys $9.3 billion in American farm goods. They have already raised taxes on some. And China has gone shopping, getting products from other places and simply not buying from US farms.
So Americans will be left baring the burden of this tariff fight, particularly the American farmer.
Ross Perot was a wealthy businessman who ran as an Independent for President in 1992. Perot advocated Americans “bite the bullet,” pay off the Federal debt, and reset our trade positions with the rest of the world. He let America know that his plan would hurt, causing financial difficulty for many, but was necessary in the long run. He received almost 19% of the popular vote.
President Trump always ran as a “tariff” guy. But he is about to “rip the bandage off” of America’s trade policy, and it will be the American people, and particularly the American farmer, that will feel the pain. He needs to make it clear that the $200 billion tariff increase on China is really a $200 billion tax increase on Americans.
Or perhaps modern day Sons of Liberty will go to the Port of Los Angeles, and dump IPhones into the Pacific.
