What are the \u201cusual\u201d purposes for tax on imports into a country \u2013 the \u201cmagic word\u201d \u2013 tariff? \u00a0\u00a0Tariffs have three different functions.\u00a0\u00a0One is to raise money for the nation imposing the tax; a revenue tariff.\u00a0\u00a0These are common and often help cover the costs of border inspections and the infrastructure required for ports and shipping.\u00a0\u00a0At the beginning of the United States tariffs were a major source of Federal government income.\u00a0\u00a0In fact, Alexander Hamilton, the first Treasury Secretary, established a \u201cnavy\u201d to help control imports, called the Coast Guard.\u00a0\u00a0They guarded against smuggling goods into the new nation.<\/p>\n\n\n\n
The second reason for tariffs is to protect native manufacturing from \u201cunfair\u201d competition by foreign nations. \u00a0\u00a0So, for example, if soccer balls made in Afghanistan are sewed together by $2.00-a-day child laborers, and we don\u2019t like child labor and folks working for slave wages, we could put a tax on those soccer balls to make then cost as much as if they were made in the USA.\u00a0\u00a0Then, US balls could fairly compete in the market with Afghanistan balls.\u00a0\u00a0Those are called Protective tariffs.<\/p>\n\n\n\n
And finally, tariffs are used to drive other issues among nations.\u00a0\u00a0If, for example, we want China to stop allowing cheap fentanyl (illegally) imported to the US, we could use tariffs on Chinese goods to \u201cpunish\u201d the Chinese.\u00a0\u00a0The same \u201ccudgel\u201d is applied to Mexico, because they aren\u2019t \u201cdoing enough\u201d to stop migrant traffic through their country to the US Border.<\/p>\n\n\n\n
But what President of the United States Donald Trump did on his so-called \u201cLiberation Day\u201d, April 2nd<\/sup>, 2025, was none of those things. \u00a0\u00a0Trump, avowedly, tried to re-set the world economic order, all in one fell swoop.\u00a0\u00a0\u00a0He placed import tariffs against goods from almost every nation in the world, everything from Canadian fentanyl to Fiji water.\u00a0\u00a0It\u2019s an economic policy that harkens back to the late 19th<\/sup>\u00a0century, when international trade was limited to certain commodities and manufactured goods.\u00a0\u00a0Most agricultural products and \u201cday-to-day\u201d goods in that time were made at home.<\/p>\n\n\n\n Here in the United States it was the hey-day of the vast monopolies.\u00a0\u00a0Standard Oil (Rockefeller) controlled the petroleum industry and US Steel (Carnegie) controlled manufacturing and transport of steel. \u00a0\u00a0US Shoe (Stern), American Sugar Refining (Havemeyer \u2013 Domino Sugar), and the New York Central Railroad (Vanderbilt), all dominated their respective industries.\u00a0\u00a0As these \u201ctycoons\u201d maintained control of their areas, they certainly didn\u2019t want competition from international providers.\u00a0\u00a0So they used their political power to institute tariffs to assure their hegemony over American goods.\u00a0\u00a0<\/p>\n\n\n\n The monopolies were ultimately broken up by (Republican) Presidents Teddy Roosevelt and William Howard Taft. The United States moved to a more international trading model.\u00a0 \u00a0The First World War generated even more trade, and the US was a major player by 1929, and the beginning of the world economic crash.<\/p>\n\n\n\n The last historic gasp of American tariff protectionism was in the depths of the Great Depression.\u00a0 \u00a0The Smoot-Hawley Act tariffs of 1930 raised American imports tariff by 20% on almost every other country, with the idea that it would increase American employment.\u00a0\u00a0(Smoot-Hawley is now the third largest protective tariff in US History, along with Andrew Jackson\u2019s tariff of 1828, and Trump\u2019s actions this week). The problem was, that world retaliation ultimately reduced American exports 61% by 1933, deepening unemployment and the impact of the Depression.\u00a0<\/p>\n\n\n\n Today\u2019s economic models are very different from the 1890\u2019s, or even the 1920\u2019s.\u00a0 \u00a0Today, the United States is in a world economic market.\u00a0\u00a0They are few shoes manufactured in the country, not many T-shirts,\u00a0\u00a0almost no \u201cminor\u201d electronics (plugs and cords) made here today.\u00a0\u00a0All of those, along with those soccer balls, are made in places where labor costs are much lower.\u00a0\u00a0Not one item I\u2019m wearing right now was made in the USA:\u00a0\u00a0\u00a0LL Bean flannel shirt (Sri Lanka),\u00a0\u00a0Santa Barbara bar T-Shirt (Honduras), Sketchers shoes (Vietnam), Hanes underwear (Dominican Republic) and Land\u2019s End blue jeans (China). Even my \u201creader\u201d glasses are from China.<\/p>\n\n\n\n The United States participates in a world market.\u00a0 \u00a0All of the tariffs instituted by the President results directly in increased prices to the American consumer.\u00a0\u00a0Conservatively, if the President\u2019s tariffs remain in effect, it will cost the average family about $5000 a year more.<\/p>\n\n\n\n So tariffs are a tax.\u00a0 \u00a0But the tax is paid by the consumer, not by the manufacturer, who reasonably passes the costs on.\u00a0\u00a0And, since there are few \u201cMade in America\u201d alternatives for many of these common goods, then it is Americans who will pay the cost of Mr. Trump\u2019s \u201cLiberation Day\u201d.\u00a0\u00a0<\/p>\n\n\n\n The President just increased American taxes by $5000.\u00a0 \u00a0And, reasonably, American companies that do export goods are waiting for \u201cthe other shoe (made in Cambodia) to drop\u201d.\u00a0\u00a0Because if the US raises tariffs, other nations will respond with tariffs of their own on American goods.\u00a0\u00a0And they will likely cause overseas sales to go down.\u00a0\u00a0The stock market is reflecting that likelihood; it\u2019s fallen by more than 5% just in the last two days.\u00a0\u00a0Americans with long-term investments, like retirement 401-k accounts, are seeing losses as well.<\/p>\n\n\n\n So what\u2019s the point?\u00a0\u00a0Why does Mr. Trump want these tariff battles?\u00a0\u00a0\u00a0Well, here\u2019s my theory. First of all, the President expects an addition $3 to $5 Trillion dollars in tariff tax revenue to the US Government. That will fuel his desire to reduce income taxes.\u00a0\u00a0So the tariff taxes on everyone will offset a reduction of corporate and \u201crich people\u201d income taxes.\u00a0\u00a0And, to be fair, maybe Trump will be able to come through with his \u201cno tip tax\u201d program.\u00a0\u00a0 But the \u201cno tip tax\u201d savings would be more than offset by the increased (by the tariffs) costs on everyday goods.\u00a0\u00a0<\/p>\n\n\n\n The President came to this strategy, in part,\u00a0\u00a0by the authors of Project 2025.\u00a0\u00a0In this case, it might better be named Project 1925, because this is the policy of Herbert Hoover.\u00a0\u00a0And we all know where that ended up.\u00a0\u00a0It was called the \u201cGreat Depression\u201d.<\/p>\n\n\n\n Trump wants America to be self-sufficient.\u00a0\u00a0 If only we could make all of the cars, and car parts, back here in the good old USA.\u00a0\u00a0Then all of those 1950\u2019s \u201cworking man\u201d jobs would be back.\u00a0\u00a0And, frankly, if this tariff policy continued for the next couple of decades, that might well happen.\u00a0\u00a0Except for one major proviso.\u00a0\u00a0<\/p>\n\n\n\n Today\u2019s manufacturing, particularly new manufacturing, is highly automated.\u00a0\u00a0The job of \u201ctightening the third nut on the left wheel\u201d as the car goes by on an assembly line doesn\u2019t exist anymore.\u00a0 \u00a0A robot does that, and new artificial intelligence is going to do even more.\u00a0\u00a0So even if those car manufacturing plants return to the USA, they won\u2019t be employing Americans, at least, not human Americans.\u00a0\u00a0They might be employing robots, made by robots, here in America.\u00a0\u00a0But that won\u2019t feed a family, even an artificial one.<\/p>\n","protected":false},"excerpt":{"rendered":"Last Gasp<\/h3>\n\n\n\n
Foreign Made<\/h3>\n\n\n\n
Trump Tax Increase<\/h3>\n\n\n\n
Artificial Workers<\/h3>\n\n\n\n