Tariffs 101

"A tariff is a tax imposed on foreign goods and services.  Reasons for imposing tariffs include:  a), the reduction of the importation of goods and services by increasing their prices, and; b), the protection of domestic producers."

Well now, Fellow Patriots, it seems that you get not only a gunsmith, an Eagle Scout, a professional pool player, a semi-pro NHRA and SCCA car racer, an Army veteran, and a serial entrepreneur, you also get one of the very few folks you know with an Economics/Psychology double major!

Wowzer, Batman!  That was some sentence!

And BTW, with a major of either psychology or economics, you can ask, "Would you like fries with that?" 

Anyway, I've discovered over the past few days that several of my friends and family have been alarmed about our new/old POTUS' imposing "tariffs" on our neighbors and non-friends.  They think the new/old guy is going to get us into wars and raise our prices for everything.  Because, they say, he's gonna' use that tafiff weapon!  Which they don't understand!  

I'm here to help you understand.

Let's start with the fact that tariffs were authorized by our Constitution, and first used by one Alexander Hamilton back in 1789.  He wanted to protect our whiskey production against foreign competitors.  And to also generate enough revenue to run our new Gubmint.  It worked.  And it's worked many times ever since.

A "tariff" is very simply a tax.  Not unlike the tax you pay on a stick of gum.  Except tariffs are imposed on the imports from other countries which have economic advantages over us.  Such as lower labor costs.  Which influence the finished price of goods.  That's why our chip makers and our car makers and our drug makers and our food makers and our washing machine makers and our cell phone makers have moved overseas or to Meheeeeko in order to secure lower production costs.  So they'll have a price advantage over our companies which didn't do the same.

Our Gubmint takes that all into consideration and then orders a tariff.  Or should.  Some percentage of the finished price of everything that comes off one of those gigantic container ships from China.  900' long, filled will goods on their way to Wal-Mart.  And every one of the products offloaded will be subject to a tariff. 

And in order to continue to compete, I'm guessing most of that tax will be absorbed by the manufacturer.   

Think about this:  The average hourly pay in Bangladesh is just over $0.55 cents.  Our average hourly pay is just over $14.00.  We impose tariffs on Bangladesh to protect our clothing industry.  Without such tariffs we would have no clothing manufacturers left in America.  You see?

In the case of China, Trump has ordered a 10% tariff.  To being with, Trump says.  And I'm assured it will stay that way until they stop sending the precursors of Fentanyl to Meheeeeko.  Which they've been doing for years.  Killing 100,000 of our citizens every year.  They've been warned to stop.  They haven't stopped.  They need their hands slapped.  In the only place where it hurts.  In their communist pocketbooks.  From what I hear they're in the beginnings of a economic recession, so they'll be hardpressed to let it occur.

And in the case of Meheeeeko and Canada, they're to pay 25%.  Because they haven't secured their side of the Border, and they haven't stopped illegal aliens from streaming across.  In Canada's case, they refuse to let our banks do bizz there.  And they don't buy our food.  Or cars.  Or milk.  Or clothing.  They also burn us on oil and gas imports, which we've been buying.  Because Obama/O'Biden wouldn't use our own oil and gas.  Even though we've got more of the stuff than any other country on Earth.    

Global warming, or something.

The Good News is that Canada's Prime Minister Trudeau caved within hours.  They've agreed to spend $1.3 Billion on Border Security.  And also send its Mounties out to corral those nasty Fentanyl producers.  They also have one month to get with the program.  If not, here come the tariffs!  

Meheeeko has used its "Maquilodoras" Industrial Free Trade Zone" to make American cars and American washing machines and American cell phones, but won't secure its Border from illegal immigration.  In fact, it's been aiding it.  Most likely because its political class is afraid of their cartels.  

Trump's imposition of a 25% tariff on its goods, more than $1,000,000,000 a year, would likely bankrupt the Country.  That's why today, less than a day after tariff imposition, Meheeeeko's Prez knuckled under.  Meheeeeko's Prez Sheinbaum has promised to send 10,000 of their military troops to the Border to secure it against illegals and Fentanyl smuggling.  Funny how we get their attention only by putting our hands in their pockets.  They've got a month to do so.  Let's see how it works out.

O'Biden and Obama and Clinton and LBJ and every single Democrat Prez in your lifetime were all politicians.  Meaning they're good at lying in public.  Trump is a  businessman.  He wrote a book about the "Art of the Deal."  You're watching it in action.  His threat to impose painful tariffs to finally get our neighbors to treat us right is a part of the negotiations.  I doubt he has any intention of actually imposing these tariffs.  It's just his opening salvo.

I'm thinking maybe his political enemies should have read his book...

P.S.  To my family and friends, don't worry.  He knows what he's doing.  And he's doing it on our behalf.  I'm laughing my ass off watching it.  Better than any movie.  It's a real-time massive course correction for our Ship of State.  O'Biden and his handlers were good at hiding our mounting problems.  Trump is ripping off the BandAid so we can see them.  And fix them.  We've been headed for the rocks for a long time.  Whether you know it or not..