I know I rally against platforms, but I do look at a few Facebook groups, including one about stage lighting. Someone pointed to an ad from an American aluminum truss maker, which had the usual bits of flag waving to sell product. The person who reposted the ad said something like, "You can avoid tariffs by buying from these guys." Putting aside for a moment that most aluminum used in the US does not come from the US, it felt like the right thing to explain how tariffs actually work.
A tariff is just a tax on goods produced overseas, paid by the domestic company or person (you) that buys the thing. If there's a 10% tariff on a widget made in China that costs $100, the cost to you is $110. The thinking is that it encourages you to buy a similar product made in the US. So let's just assume that an American company can produce the same goods at the same price, meaning the cost of labor and materials is the same. They're not, but let's pretend they are.
Let's say that you need to buy a washer and dryer. I'm not sure if LG makes those specific appliances in South Korea or Tennessee, but for argument's sake, let's source them from Asia. Whirlpool makes theirs in Ohio. The LG pair cost $1,000 at the border, but with a 25% tariff, that price goes up to $1,250. Again, pretending that Whirlpool can make the similar unit for the same cost, do you sell your pair for $1,000?
If you're a responsible business, the answer is no. In this scenario, your competition is selling for $250 more than your old price. If you raise the price even by $200, so it's "cheaper" that you competition, you're still winning as a company, and you achieve a higher margin. It's all gravy. The problem is that for you, the consumer, in the absence of the tariffs, your price for either set would have been $1,000. Even at $1,200, you, Joe America, are going to pay 20% more than you would have otherwise.
Now apply this to... everything. One researcher says that 60% of the goods at Walmart are from China. If the rest all came from the US, applying the above scenario, those prices will rise too. The result is inflation. Everything gets more expensive. Inflation can be caused by a lot of things, including an imbalance in supply and demand, or supply chain issues. But the tariff is totally self-inflicted harm. It doesn't benefit consumers at all, it only harms them. Oh, and the nations you put tariffs on will return the favor, so now the goods you want to export risk reduced demand because they cost more elsewhere.
As I'm passionate about learning from history, there's a pretty glaring example of this. At the onset of The Great Depression, the Smoot-Hawley Tariff Act imposed tariffs that made the depression worse. Global trade collapsed, and the entire world economy tanked.
So how do tariffs work? They don't. You don't need a degree in economics to understand this.
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