It's so simple, but...we need to talk
If we want to make a good argument, we must begin with a good foundation.
I worked on an essay dealing with a serious topic and ended up with something I threw away, figuratively speaking. It was too long, too detailed, and not very useful, so I walked away, very annoyed with myself!
Instead, I want to talk about something that is “simple” and “obvious”; but not all the time and not to all people. Bear with me. It’s about tariffs.
Let’s say a German company sells a product to Amazon in the U.S.
Without a tariff:
The German manufacturer charges Amazon $100 for its overhead and profit.
Amazon adds $50 for its overhead and profit.
The U.S. customer buys it for $150.With a 50% tariff:
The German manufacturer still charges Amazon $100.
At the port of entry in the U.S., Amazon must pay a $50 tariff before it can take delivery.
Amazon still wants its $50 for overhead and profit.
That makes the new price to the U.S. customer $200.
Key point: The German manufacturer does not pay the tariff — Amazon, the importer, does. But Amazon passes that extra cost along to the final buyer.
If you’re the one buying the product, you are paying that tariff through a higher price.
The importer pays it at the port, but you pay it at the checkout.
It can’t get much simpler than that. I am not doing this to suggest any of my readers don't already understand tariffs or cannot quickly understand them, but many people don't because they never had to know! Ignorance is a perfectly valid excuse. You might be surprised how many people you know who aren’t clear on tariffs but don’t like to sound clueless.
Don't assume that just because someone agrees that a tariff is not a good thing that they understand. Take a few minutes and ask them, "Do you understand how tariffs work? So simple, but I never thought about it."
I really hate the so-called “tariff war” since it is primarily a war against ourselves, but I deal with a wide variety of people of different nationalities and, frankly, I am disturbed with how many of us don’t help each other understand what is going on “out there”. There are so many issues, it’s exhausting, but tariffs are special. Not only do they drive a wedge among allies. they will show up at checkout, and when the cost of living rises, so do consumers.
We need to regain our balance and address the fundamental issue for so many Americans (and others) – insufficient income. A tax on consumption (which is how I see it, especially during the current “war”) is not a bright way to deal with it, and that needs to be clear when it shows up in the prices we pay.
And here’s a bonus! Whenever you hear someone praise the billions of dollars already paid to the government from tariffs, remember one thing.
Every penny of it was paid by an American.
Hi Tom, thanks for writing. Unfortunately, the German company cannot pay the tariff. That can only be paid by the American importer. The full amount is paid at delivery to the port, just prior to pick-up by Amazon. Amazon pays the whole amount to the US government. No exceptions. If you have a shipper near you, ask him.
If the German company is willing to cut its profit, that may make sense in the short term in hopes the taruffs will go away, but stockholders are not going to be happy with it. Neither will their government because German companies are going to complain, along with 100+ other nations. They will keep track of their losses and report them to their governments and clients, as well as stockholders. Their annual audits will demonstrate the impact, too. Don’t worry. They will let us know, as well as American consumers who prefer their products.
As for American firms, Amazon included, making them reduce their profits is not going to impress them, or their stockholders either. No, any government that, through its policies, forces the private sector to raise prices or lower profits is a socialist government. Tariffs are just another tax by government regulation and an expensive one. I have seen socialist states and I wouldn’t trade free enterprise for any of them. The best market regulators are consumers, not someone behind a desk in DC.
Thanks again for writing. You arfe welcome here.
You state that "Ignorance is a perfectly valid excuse". May I suggest that it is a 'reason' and that education should have taught us to overcome Ignorance?