Time to Think

Tarriffs Are Trouble #312

By Hank Silverberg

Commentary

We have heard a great deal over the last few weeks about President-Elect Donald Trump's plan to impose tarriffs on foreign imports into this country.

He has talked about a tarriff as high as 25% on goods brought in from China, and 10% on goods brought in from our direct neighbors-- Mexico and Canada.

Some people think that's a great way to raise revenue, and it will allow the President to then reduce taxes across the board for most Americans.

Two problems here, though. The tax cuts imposed during Mr. Trump's first term benefited mostly the very wealthy, and the average taxpayer received very little relief.

Trump's theory, which he hopes will be aided by suggested spending cuts by billionares Elon Musk and Vivek Ramaswamy, is that the tarriffs will bring in enough money to make up for most of the lost revenue.

You won't get much of an argument from anyone that there is fat and waste that can be cut from the federal budget. But the cuts will be minimal unless Musk and Ramaswamy cross the third rail and cut Social Security, Medicare/Medicaid and the Defense budget which make up the overwhelming majority of the federal budget. If such cuts are made, they will have a negative impact on millions of Americans, something at which even the Republican Congress may balk.

But here's the major issue with tarriffs. The revenue they bring in will be offset by the massive increase in the price of everyday products across the board.

Here's just a small example. As I was shopping in Costco this weekend, I took a close look at the origin of many of the products for sale. In the clothing section of the store I checked seven items. All of them were made overseas. One came from Indonesia, but the rest came from China. So raise the cost on all of those by 25% to make up for the tarriff that U.S. will charge for their import, and they are no longer the bargains you may be used to at Costco.

And that's just low-end products.

Across the store, there's a large display of computers, smart phones and other electronics. They were ALL made in Asia, either China or Japan. Add on 25% to the price of that new I-Phone you want.

It wasn't just clothing and electronics. My wife picked up some fine looking strawberries at Costco. They came from Canada. The price was $9.99. Add a dollar to that next year for the 10% tarriff on Canadian goods. As we stood on a long holiday- infused checkout line, they had a nice display of various types of nuts on a nearby shelf. Those roasted chestnuts you might want to buy for the holidays also came from China. Add 25% to their cost next year. I did find some pistachios grown in the USA, but they were the exception to the rule.

Thinking of buying a car? You want to stick with a spanking new American made car like a Ford? Well, the cost to you there will also go up 10%. Many of the parts for that Ford were made in Mexico, and the higher prices the tarriffs will cause could bring on sticker shock to dealerships across the country.

We live in a global economy. The idea that tarriffs will make American industry great again is rediculous. Take a look at this map.

So everyone across the country can expect prices to increase here as a result of the tarriffs.

Why? Well, you don't really expect Costco or Ford, or Apple to lower their profits just because of tarriffs, do you? They will pass the cost on to the consumer.

It will be interesting to see what all those MAGA Republicans are saying in about two years or so if those tarriffs are ever imposed. I am hoping rational heads prevail in Congress and the tarriffs don't happen.

The good news? Those egg prices that everyone is screaming about won't be affected by tarriffs since the eggs are a domestic product. The price went up because a billion or so chickens had to be destroyed due to the bird flu. Once the flock recovers, the prices of eggs will go down. You can use the extra money to pay for the price of the tarriffs.

News You May Have Missed!

A decision by the U.S. Department of the Interior may have come just in time. A recent decison will save more than 28 million acres of wildlife habitat and traditional Tribal land in Alaska. The land total is larger than the entire state of Virginia, and includes wildlife corridors, habitats and waterways that are important to the survival of at-risk species, including caribou, migratory birds, and Pacific salmon.

The land is also important to more than 100 Indigenous Alaskan communities that rely on these resources for their livelihood. The preservation area includes land adjoining the Yukon and Kuskokwim Rivers, wildlife refuges, and the Bering Sea.

A story in Trust Magazine republished by the Pew Charitable Trust says the land was originally set aside in the Alaska Native Claims Settlement Act passed back in 1971, but the locals have been worried about recent attempts to bypass that law. According to the magazine, a new environmental review found that taking away the protection would have a severe impact on subsistance resources like wildlife, vegetation and watersheds that suppport fish populations, moose and caribou. The Bureau of Land Management recommended that the federal protections stay in effect.

There is some question if these decisions will hold in the face of the incoming Trump Administration. Trump has talked about opening more federal land to development and oil drilling.

https://www.pewtrusts.org/en/trust/archive/fall-2024/28-million-acres-of-alaska-land-remains-off-limits-to-big-development

Scariest Quote of The Week!

The quote is actually from a comment made last year by Kash Patel, President-Elect Trump's nominee to become FBI Director who apparently sees conspiracies behind a free press and scoundrels among life long FBI agents. In an interview last year, he said about journalists who criticize Trump:

“We’re going to come after you, whether it’s criminally or civilly — we’ll figure that out.”

The Washington Post has reported that some of Mr. Trump's biggest critics in law enforcement, the government and some in the media, have already started to prepare for a quick exit from the U.S. if Patel follows through on his threats.

(You sugestions and comments are welcome)

My recent book "The Campaign" can be purchased at the links below. Or you can buy a copy by emailing me at: HankSilverberg@gmail.com for instructions on how to get a copy at a reduced price and with my signature)