Thoughts on Tariffs

Tariffs are taxes. Usually, the tariff is collected on imported goods, such as “Duty Fees” when we come back from vacation, or taxes on imports.

Are Tariffs good or bad? I think it depends on the goods being taxed. If we could make it or grow it, we would use our own goods, right?

For my thinking, raw materials should not be taxed when they come in – when they are imported. Some finished goods should be taxed coming in, but not going out. Only those that we make internally should be taxed. If we can’t make the goods, why tax the goods when they come in?

Tariffs are best used to protect Domestic production – either raw goods, resources, or manufacturing. Otherwise, they are counter-productive. There are “political” uses for Tariffs, but that only makes them more expensive to buy in our country.

Once I’ve used my domestic resources, I must purchase resources produced by other countries on the international market. Why would I purchase it if I don’t need it? If I’m growing wheat, I want to use Domestic-produced wheat for bread for the people, instead of bread purchased from an international grower, because it’s more expensive to import wheat, when we add in shipping and tariffs. Same with tin, aluminum, iron, steel, corn, soy, wheat, and so on. Also, I can spend my money where I want to, supporting the countries and producers that align with my political goals.

For instance, let’s say I make machine parts. I don’t want domestic shoppers to buy them from an international maker when I can make goods to order in a timely manner. Same with automobiles, tractors, airplanes, sewing machines, computers, etc. In these examples, I would impose a tax, or tariff, on the imported goods so that my domestic industries are supported and not undersold by inequalities in labor costs or resource production from international producers.

What about the things I don’t make? Like computers, fabric, wool, fabric dyes, tea and coffee, printers, televisions, and so on? Those, I must import – or develop manufacturing for them. If I must import these goods no matter what, why would I want them taxed? Taxing the goods would only make them more expensive for their end-users – my people! So, I would not tax these goods.

What about the things I produce in excess? Like wheat, corn, soy, automobiles, paper, and so on? Tax those on the way out? Why? If raw goods, and there is no domestic use for this excess, let the goods be sold on the international market. And if I make goods that no one else makes, then those can be sold on the international market, as well. However, with the inventiveness of other countries, selling my manufactured goods may not bring much in trade to counteract a trade deficit.

Tariffs are not an effective political tool. They are meant more for protection of domestic production. They might be used to punish, or deter trade from, an international producer of a widely-available good. For instance – let’s say fabric can be purchased from several international producers. I might impose a larger tariff on goods produced in a country that doesn’t align with my political agenda in foreign policy. But if that country is the only producer, this tactic won’t work.

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