The Idiot Strikes Again

Let’s start this by defining the key term: Tariff. A tariff is a tax on imported goods.

How it works. If an imported item with a cost of $100 is subject to a 5% tariff, it costs the importer $105 to bring that item into the country. The exporter collects their $100 and the $5 goes into the US Treasury.

Who Pays. The importer of the item can then either absorb the cost of the tariff by reducing their profit margin on the sale of the item by $5 or they can raise the price to the end consumer by $5 or some mix between the two. In the end, the tax is paid by us.

Our super genius businessman Commander In Chief has decreed that if Mexico doesn’t solve the illegal immigration problem in the next few weeks, he’s going impose 5% tariffs on goods imported from Mexico.

Leave aside the fact that illegal immigration is at historically low levels. Ignore the absurdity that Mexico is going to solve this problem for us in a month. Consider only the idea that because Trump doesn’t like what Mexico is or isn’t doing about illegal immigration, he’s going to levy a tax on the American people. He is going to penalize us for what he sees as their bad behavior.

If Congress were not just an assemblage of feckless gasbags with no interest beyond maintaining their own privileged status they would strip the executive of the authority the levy tariffs that they granted. But the sad fact is a lot of them are probably stupid enough to think this is a good idea.

Author: Stephen Macklin

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