Let’s make this real simple…”tariffs” are taxes…period. And consumers pay taxes…hence, consumers pay for tariffs. Sure, companies who import the products that tariffs are applied to pay the tariffs originally, but then pass that cost on to consumers in the form of higher cost of those products. So, when you hear a particular product coming in from a foreign country will have a tariff applied, it means the price of that product will go up to the US consumer.
Now the question is, “Are these ‘Trump’ tariffs good?” The answer: Absolutely “YES!” and a little “no” mixed in.
Historically speaking the United States was funded primarily through tariffs (including import duties), excise taxes, and land sales. For the first 126 years (+/-) of US history there was no Constitutionally approved income tax. Income tax was not formally adopted until 1916 with the rise of the radical leftist Progressive movement. And the US did just fine funding the federal government during that 126 years…other than a war with itself that killed about 170,000 of its own citizens (almost 6% of the entire US population) in a civil war. For that the federal government forced a form of income tax on the US population to pay for all those deaths.
But what about the ‘Trump Tariffs’???
I have no idea of what is in Trump’s head and exactly what he wants to accomplish by imposing tariffs on good from foreign countries. But, I do clearly know what will happen…and what could happen.
First – The price to the US consumer of ALL goods from foreign countries on which tariffs have been imposed will go up. How much? That depends on the % of the tariff and how much the importing company decides to pass on to US consumers. But the prices will go up.
Second – It will slow down the US economy. When you take money out of consumer pockets and send it to the US federal government that consumer has less money to spend on goods and services such as food, fuel, cars, TVs, clothes, etc.
Third – Some manufacturers, exact numbers entirely unknown, will build and makes “stuff” in the US that previously was imported from foreign countries to avoid tariffs…some of those tariffs may be very high such as 25 – 60%. Take a ‘widget’ that cost an importing company $100 to buy, then they have to pay a 25% tariff to get it into the country. That makes the cost of that product now $125. But, they figure they can make that same ‘widget’ in the US for $115. So they start making it here in the US to reduce their cost of goods.
Fourth – A possible outcome may be that foreign countries who impost high tariffs on US goods…such as China 67%, India 52%, and Japan 42%…will reduce their tariffs so the US will reduce our tariffs against their countries’ goods.
So a great question right now would be…”Are reciprocal tariffs a good thing?” NO! They are a great thing!!!!! For years and years and years other countries have charged higher tarries on US goods while we had no or very low tariffs on their imported goods. Hence, we were paying welfare checks to other countries to strengthen their economies and protect their companies and protect (and increase) their jobs. Bottom line…Americans were suckers paying hard earned money so other countries could benefit from us. STUPID!!!!
Reciprocal tariffs are a truly great concept…a great way for the US to treat those who abuse us by sucking money out of our economy for some foreign country’s benefit. You charge us a dollar on our goods, we will charge you a dollar on your goods. Fair is fair!!! The US needs to stop being the world’s welfare checking account!!!!!
So why did the US government tolerate high tariffs on US goods for the last 60 years to begin with? Well, that is a simple one…globalists. Globalists want everyone in the world to be equal…well, at least the lower-class folks. For globalists there are only two classes of people…the rich elites, maybe .5 – 2% of the world’s population, and then the lower-class folks…also known as the working class people. Sound familiar? It should…communism…but on a global scale. And tariffs was a perfect way to suck money out of the US economy (biggest and best in the world) and move that money to all other countries to improve/equalize their wealth.
Oh, and the rich elites skim a hefty amount right off the top making them far, far richer. And then remember this…he who controls the tariffs controls populations…yeah, called power.
When did the US middle-class start to disappear? Oh yeah, in the early 1970’s…the same time tariffs on US goods started to take off, global trade became the big thing, the US was taken off the gold standard, and the US dollar officially became a ‘fiat currency’. Sound familiar? Since that same time, early 1970’s, US manufacturing began its decline; accelerating when China came online as the world’s manufacturing powerhouse.
Are you seeing how this all fits together?
So why would Trump start a tariff war? Let me be clear…Trump is NOT staring a tariff war! Trump is simply fighting back in that war that began long ago. I believe what he is trying to do is this:
- Bring manufacturing back to the US. And in doing so that creates manufacturing jobs…and that might rebuild the middle-class. And it would make the US more self-sufficient in the industries in which manufacturing does return to the US.
- Tariffs will help fund the US federal government. Tariffs are paid by importing companies to the US federal government to fund government activities and/or pay towards reducing the national debt or paying to service that debt.
- Change the world culture. For many decades other countries have been living on US welfare in the form of their tariffs on US goods imported into their country.
Don’t discount this global culture shock! For instance, the European Union charges 39% tariffs on goods imported from the US. That means that a EU Jeep dealership would normally pay let’s say $20,000 for a new jeep to imported to the EU for them to sell. But, when you add the 39% tariff on that Jeep it now costs almost $28,000 to get it on the EU dealership lot. The EU dealerships then sell a whole lot less Jeeps because they are very expensive compared to EU made cars. That $8,000 difference in price…well, that goes straight to their EU government! And that reduces the number of US jeeps sold, which reduces the number of Jeeps made, which reduces the number of American jobs to manufacture Jeeps.
Since the early 1970’s the United States of America has been one HUGE welfare checking account for the world. When governments around the world no longer can suck US dollars out of the pockets of US taxpayers…well, they are going to struggle with that…and it won’t be pretty.
Here is the main problem with “reciprocal tariffs”…at the very least, the best case scenario, it will be 2 years before manufacturers will bring plants and associated jobs back to the US in any meaningful way. Some industries such as automobile manufacturing could take 10 years to get manufacturing plants up and running with those nice middle-income jobs. Can the US survive that long economically in the mean time?
Then again…maybe there is a more important, a more applicable, maybe a more urgent question we should be asking…
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