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Econ 101 - Tariffs are tax [1]
['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']
Date: 2025-04-03
All right everyone. Stop saying tariff. Just say tax. Tariffs are taxes. Taxes on imports. Why we have a different word for it is probably a Jaques Derrida level analysis. But whatever.
How trade taxes work:
Step 1
An American business negotiates a purchase of a product/input from some country.
Step 2
The product/input is shipped to an American port of entry.
Step 3
The American importer pays the tax to bring the product/input ashore.
Step 4
The importer raises the sale price of the product/input to whomever is buying it in America to account for the tax. It's not like they're going to eat this cost. And I certainly the exporter isn't going to pay it.
Step 5
That price is reflected in the final sale price to the ultimate consumer in the US.
This results in an overall increase in prices and decrease in availability of goods and services. Inflation and shortages. We have known this reality in textbooks for hundreds of years. Adam Smith wrote about the impact of trade "protectionism" in 1776. It's a classic "shift to the left" of the supply curve.
It's one of the most basic principles of economics! Even a graduate of the Wharton school should know it.
Taxes are a necessary part of creating a functional society. Taxes ought to be levied in a fair and appropriate way. Tariffs can be used to achieve fairness and appropriateness. But this clown (Trump) clearly doesn't understand how the economy works nor what fair and appropriate means.
Maybe we shouldn't let a convicted felon, bankrupt con-man pull the levers of international transactions.....
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