TARIFFS

I've just watched yet another 'meet the press' event held by president-elect Trump at Mar-a-Lago where, amongst other things, he once again reiterated his belief that 'tariffs' was a beautiful word.

He continues to preach the nonsense that once he imposes tariffs on countries such as Mexico and China that these countries will then pay the USA billions of dollars for the right to import goods into the country, and America will grow rich on the proceeds.

NO THEY WON'T AND NO IT WON'T!

The USA, nor any other country, can compel another country to pay it money - it just doesn't work that way and either Trump is a deluded fool, or a liar, it must be one or the other, there is no third way.

When a government imposes a tariff on imports it does so upon those it has jurisdiction over ie its own citizens.

To give a simplified example that even a moron like Trump should be able to understand - a US company, let's say Walmart, imports a washing machine from China and pays the Chinese manufacturer $200 for the product.

The US government has imposed a 50% tariff on Chinese imports so Walmart have to pay the US treasury a $100 import duty when the machine arrives in the USA.

The washing machine has now cost Walmart $300. It wants $20 for handling, advertising  and transportation and $10 profit on the sale making the sales ticket for the washing machine $330, which is $100 more than it would have been without the Trump tariff.

China pays nothing - zero - zilch - nada - not a single cent! The American citizen buying the machine pays instead!

So either the customer pays more for a product than it would otherwise do, or can't afford it so doesn't buy it at all.

Either way, the result is a financial disaster - inflation increases, Walmart's profits plunge, it lays off thousands of workers, closes stores as no-one can now afford its goods, living standards decline, and of course it is likely that those countries whose goods Trump imposes a  tariff on will retaliate by imposing tariffs on US goods imported into those countries, meaning they will become more expensive and less likely to be bought, leading to more US factories and farmers losing their markets - more closures, more job losses - it just gets worse, and he thinks this is a beautiful word?

Well Trump thinks so, safe in his protected environment, but for Mr and Mrs Average American I'm not so sure but hey! This is what they voted for so can't complain, they will reap as they have sown and, I suspect, will live to regret it.