Tariffs: It’s a Tax ‘Eventually We All Pay in Higher Prices’

Tariffs: It’s a Tax ‘Eventually We All Pay in Higher Prices’


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Janet Ybarra
Former Washington Journalist
Contributor on The Bipartisan Press

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Republican presidents may have, at one time, genuflected at the altar of free trade and tariffs were once anathema. But, for Donald Trump in his trade wars, they have become his weapon of choice.

And he just wielded them once more against China, with what could be surprising and unpleasant effects for their economy–and ours.

Trump actually seems to joke about the jousting he engages in against the world’s second-largest economy.

Trump essentially reduced his fresh round of tariffs to little more than a laugh line at a rally in Florida, where it became scant more than a cheap way for Trump to skewer Mayor Pete Buttigieg, one of the Democrats seeking the opportunity to run against Trump next year.

“We have a young man Boot-edge-edge. Boot-edge-edge. They say edge-edge. He’s got a great chance, he’ll be great. He’ll be great. Representing us against President Xi of China, that will be great. That’ll be great,” Trump said. “I want to be in that room, I want to watch that one. By the way, you see the tariffs we’re doing?”

Yes, Mr. Trump, we do see the tariffs you’re doing. Because, for the rest of us, these tariffs can be as serious as a heart attack.

This latest round involves the Trump administration hiking tariffs on more than $200 billion worth of Chinese products: up from 10 percent to 25 percent.

“And remember, a tariff is essentially a tax,” explained Fox News anchor Shep Smith. “The importer pays that tax and can pass it on to the buyer in America or absorb it. Of course, eventually we all pay in higher prices. But in this trade war, like all others, both sides have shots to fire. Next is China’s move. The question is, will China answer or escalate? China could go light and raise tariffs on American products that are already targets, but might it also tax or even ban, say, U.S. soybeans, which would be crushing for American farmers? Or might China escalate by hitting some of America’s biggest brands, Apple, for example.

“Imagine no iPhones for 1.2 billion Chinese customers and what that might do to the markets and the broader economy,” Smith added. “The next move is China’s, and analysts expect that move will come very soon.”

The pain is much less abstract, and more immediate, for many American businesses, including Kent International, the New Jersey bicycle maker which represents three generations for the family behind the business.

“You know, the business is a tough enough cycle dealing in a very competitive landscape. Whenever there’s a price increase that we have for whether it’s currency or now these tariffs, there’s always a time gap between when we receive these price increases and when we can pass them on to customers. And that means a pretty big hit for us,” said Arnold Kamler, the head of Kent International and whose family history traces back with the company to 1907.

Sen. Elizabeth Warren (D-Mass.), another presidential hopeful, clearly takes issue with the apparently cavalier attitude Trump takes to these tariffs and trade negotiations.

“I don’t believe in tariff negotiation by tweet. I think that we need a comprehensive, coherent plan before we ever get started, and that would start with bringing our allies together so that we have maximum leverage against the Chinese,” she said. “The Chinese are bad actors on trade. That means that our best way to fight back is with strength and with a coherent plan, not with chaos.”

Bicycles aren’t the only American market hard-hit. Ask Democratic Rep. John Garamendi, who represents a variety of California agriculture producers who depend on selling to the Chinese.

“Clearly we’re in the midst of a trade war. I think we’re missing one of the major points at least for the people or the farmers in my district is that they have already lost their markets in China for everything from wine to almonds and beyond,” Garamendi said. “And the earlier round of tariffs by the United States didn’t necessarily result in a tariff on American goods but it resulted in the shutdown of American products being able to be shipped into China. There is a world of hurt. The almond growers in California have already lost well over a billion and a half dollars in their markets as a result of this trade war.”

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