Want to Boost U.S. Affordability? Get Rid of Tariffs

On the flip side, if done well--say as a pretty universal "revenue tariff" of around 10% or so--you would be able to reduce income taxes and corporate welfare. Tariffs are part of the affordability crisis, yes, but that's together with income taxes, regulations, and more. Income taxes are particularly bad because it costs a LOT to comply with them--I've heard something like $3-400 billion annually in compliance costs (think of how long it takes to file your taxes), and then there's another $3-400 billion annually in the costs of corporate welfare--costs that in turn come out of the pockets of taxpayers, either as taxes or increased borrowing and higher lending costs for taxpayers. And then you've got the cost of excessive regulations--that's getting up towards the trillion dollar mark.

More or less, what we have is not a crisis of one kind of taxation, but rather a crisis of the overall size and impact of government.

Not a great article. First, everyone wants to blame Biden for Inflation. The roots of our inflation crises was the injection of $2Trillion into the economy by the Federal government during COVID. This was started by Trump and continued under Biden. Business 101 - When government prints large amounts of money and injects it into the economy it creates inflation. Second, it is doubtful that we will see much price decrease after tarrif reductions. Study after study has shown that companies are resistant to lower prices as a result of tariff cancellation. In addition, those companies that are hit by tariffs will raise prices, but also those companies that are not hit by tariffs will also raise prices. Tariff's are generally an awful idea. Trump likes them because it is an economic sword that he can wield to push people to do what he wants.

Tariffs are a blunt instrument. I think most of us would agree it would be better if we didn’t need them. Free trade sounds like a great idea until you run into human nature.

We need something to counter unfair trade from other countries (dumping, refusal to accept US products or placing large tariffs on them, or in the case of large state-controlled economies, also directly controlling the value of the country’s currency to undercut other nations). If you can think of something better than tariffs, fine. But we need them (or a tool just as effective) the same way we need a nuclear deterrent. Nuclear weapons are expensive to produce and maintain, and, as you said about tariffs, the idea of a weapon that kills hundreds of thousands is generally awful. But having them to keep others from attacking is effective, if not ideal, and, at least in my opinion, far preferable to the alternative.

We also have laws controlling monopolies (another outgrowth of completely free trade) because of what people with do with that power when they have it. Does that make certain things harder or more expensive? Certainly it can, but once a true monopoly exists, then you really have no control of prices of a particular commodity.

All this to say, yeah, it would be better if we can get rid of tariffs. Come up with a better way to keep our country from being taken advantage of, and show that it works effectively, and I’m sure you’ll get plenty of support in eliminating tariffs. Until then, I’ll continue to prefer using a big stick to keep relations with other countries fair. Personally, I like that Trump is willing to carry a big stick AND show that he’ll use it, so he’s not a paper tiger. His real issue is that he can’t “speak softly,” but would prefer to bluster loudly while carrying the big stick, which makes him come off as a bully. Still, I’d prefer to negotiate from a position of strength rather than weakness (often called “leading from behind” by those unwilling to ever exercise power, but still thinking of themselves as “leading”).

Dave,

I agree to a point, tariffs are a necessary evil. But in most cases, Trump has negotiated worse agreements with companies post his tariff waving. The China agreements are terrible, Canada and EU are worse than what we had before. He is using them less around balancing trade and more about just punishing people/countries into doing things, most often than not, not even economic in nature.

The thought I've had since I was in high school is simple; that if our Navy is going to be keeping the sea lanes open for everyone, then we ought to get the revenue we need for that (and ports, and the Coast Guard) from import duties. I don't see much sense taxing U.S. workers via income taxes to fund the Navy so their competition can get products to the U.S. cheaper.

And yes, point well taken that it's those same workers who will pay either the import duties (ultimately) or the income tax alike, but it at least would put U.S. and international products on closer to the same footing. Plus, it's a lot cheaper to collect (just at ports, really), and is nowhere near as intrusive as the income tax.

The import duty is essentially a consumer tax anyway. It is more like a sales tax. But in the end the manufacturer or the importer absorbs the extra cost or they pass it along to the consumer. The local manufacturer's will also increase their prices most oftentimes to match the competition. The consumer is getting hit with higher prices for both the foreign product and the domestic product.

In reality the US workers is not being taxed to fund the Navy. Since we are running nearly a $2Trillion annual deficit, we are borrowing money from investors to fund the Navy. Those investors are a mixture of foreign entities and US citizens. We are asking US workers to pay for the interest on what we are borrowing. We are able to borrow that money because of the strength of the economy in comparison to the rest of the world.

....but you can avoid paying tariffs to a certain point by not choosing to buy imported goods when that's possible. Yes, it's harder than when we were kids (when even Nikes were made in the USA), and yes, we borrow a lot of what we spend, but the calculus for business siting is the same; how much does it cost to make here vs. how much does it cost to import?

And if we "earmarked" tariff revenues for ports, the Navy, and the Coast Guard, and the cost to import rose 10% while the cost to manufacture domestically dropped, that does change the equation--and then you can drop corporate welfare, welfare payments, and more.