Tariffs. China. Mexico. Canada.
Those opposed are touting how tariffs will jack up prices. And they are right. But that doesn’t mean tariffs don’t work, or that even the Dems have been doing things that are essentially tariffs that increase costs to consumers already.
Now, not everyone understands what a tariff is or what issue it can address. So I’ll give a simple example.
Two identical taco restaurants open along the border of two different countries. They sell the same things, look the same, are the same size.
One country has labor laws, has a minimum wage, requires safe working conditions. They require regular inspections of equipment, they have environmental laws for removing trash and the disposal of oil.
The other country has none of them. They pay far less to their workers, throw leftover oil and trash in the river, and work their staff 80 hours a week.
Now, who can sell tacos cheaper?
Obviously the one that has no laws to follow.
So people, even those who are labor or environmental advocates, still want the best price, so they line up for the cheaper taco. And that taco restaurant does great, raking in cash, while the law-abiding company struggles.
But then it gets worse. The country without the laws wants its’ restaurant to get, not just 75% of the business, but 100% of the business. So it hands its restaurant cash, called a “subsidy”, so it can sell their tacos even cheaper, effectively putting the law-abiding competitor out of business and now owning the entire market.
So the other country with the laws responds. They don’t want to lose a law-abiding business with good people. So they add a tax, or tariff, to anyone buying tacos at the cheaper place to level the playing field. So even if a company has a price advantage as they have no labor laws or environmental rules to follow, consumers still pay the same price, and law-abiding businesses can stay open.
This is what has taken place with tariffs, especially with China and Mexico. Americans yell about wanting labor and safety laws in place, they want clean air and environmental laws, but they also line up to buy products from countries who do none of those things. And this threatens many US industries, most notably the steel industry.
Now, Democrats complain that this will drive prices up. True, but so have all the labor laws, minimum wage laws and environmental laws they have passed on American businesses.
And using Democrats as an example, they have placed demands in many state contracts that materials must be from the US, driving costs up as well. That demand is essentially a tariff, demanding that the more expensive local materials be used, which then forces additional costs on projects, like our bridges and roads. And you pay for that in taxes.
And remember, Biden kept many of the tariffs from Trumps first term in place when he took office, and tariffs did have a positive impact on the security of American manufacturers, like steel.
Now, the above applies to China and to a large extent, Mexico. It appears the tariffs on Canada have more to do with Trump wanting to see more movement to stop Fentanyl from coving over the border.
What is missing in how Trump is implementing tariffs on Mexico and Canada is I can see no definable benchmarks that need to be hit for those countries to remove the tariffs. 100% elimination of drugs coming over the border is impossible, and the time he has been in office is not nearly enough to see any meaningful movement. So what is unclear, to both me and likely Canada, is what is acceptable progress in Trumps head.
All of this is due to Americans giving lip service to caring about working conditions, environmental laws, minimum wage laws, but at the same time they line up for the cheapest option. When Americans line up to buy $4 dresses on Shein, they are simply ignoring that it’s a Chinese company that follows none of the environmental laws US companies must abide by. When we buy sneakers and jeans and children’s toys that are cheaper from China, we are ignoring the sweat shops they are made in as underage laborers work 14-hour days.
Will tariffs bring up costs for the average American wanting to buy these things? Yes. It will also save American jobs and manufacturers who are following the laws who make the same items. And it’s no different than Democrats demanding that suppliers of electrical wire and rebar for state projects are made in America.
The same Americans who clamor about buying local are also clamoring that tariffs on foreign goods will make their costs go up.
Make it make sense.
Tariffs