A tariff is nothing more than a sales tax

Lately the government has been going online bragging about all the extra tariffs are bringing in. Incredibly, some consumers are cheering them on. So I thought what I would do today is explain the basics of tariffs and how they work, so these consumers will have a better understanding of where tariff money comes from.

Let’s say you have an American company that wants to spend $100,000 on T-shirts and sell them for $10 apiece, earning itself a tidy profit. It searches the world over for a T-shirt manufacturer and finally locates one in China. The American company sends $100,000 to the Chinese T-shirt manufacturer, and the Chinese T-shirt manufacturer creates $100,000 worth of T-shirts and puts them on a boat bound for the United States.

When those T-shirts arrive at a port in the U.S. the American government steps in and says, “We have placed a 25 percent tariff on all incoming goods from China.” Twenty-five percent of $100,000 is $25,000.

Who pays that $25,000?

Not the Chinese T-shirt manufacturer. Not the Chinese government.

The American company that imported the T-shirts pays the $25,000.

And then what? Does the American company eat the extra cost and continue selling T-shirts for $10 apiece? If the do, bless their hearts. They’re saints.

Most companies will try to recoup that loss by raising their price. In this case, the cost of the T-shirt goes from $10 to $12.50. When YOU, the consumer, come along and pays $12.50 for the T-shirt instead of the usual $10, YOU ARE PAYING THE TARIFF.

Tariffs are really nothing more than a sales tax. The government doesn’t call it a sales tax because they know if they did, you’d go berserk. Instead, they package it as a way of retaliating against other countries engaged in unfair trade practices. But when it’s all said and done, a tariff is a sales tax.

When you go online and cheer the money being raised by tariffs, you’re saying, in effect, “Sales taxes work! Look how much money they took from my pocket! Tax me some more!”

Do you see how foolish that looks?

That’s why economists the world over agree that in most cases, tariffs are a bad idea. They’re bad for trade; they’re bad for consumers.

Do you now see why that’s true?

About the author:

Del Stone Jr. is a professional fiction writer. He is known primarily for his work in the contemporary dark fiction field, but has also published science fiction and contemporary fantasy. Stone’s stories, poetry and scripts have appeared in publications such as Amazing Stories, Eldritch Tales, and Bantam-Spectra’s Full Spectrum. His short fiction has been published in The Year’s Best Horror Stories XXII; Alfred Hitchcock’s Mystery Magazine; the Pocket Books anthology More Phobias; the Barnes & Noble anthologies 100 Wicked Little Witch Stories, Horrors! 365 Scary Stories, and 100 Astounding Little Alien Stories; the HWA anthology Psychos; and other short fiction venues, like Blood Muse, Live Without a Net, Zombiesque and Sex Macabre. Stone’s comic book debut was in the Clive Barker series of books, Hellraiser, published by Marvel/Epic and reprinted in The Best of Hellraiser anthology. He has also published stories in Penthouse Comix, and worked with artist Dave Dorman on many projects, including the illustrated novella “Roadkill,” a short story for the Andrew Vachss anthology Underground from Dark Horse, an ashcan titled “December” for Hero Illustrated, and several of Dorman’s Wasted Lands novellas and comics, such as Rail from Image and “The Uninvited.” Stone’s novel, Dead Heat, won the 1996 International Horror Guild’s award for best first novel and was a runner-up for the Bram Stoker Award. Stone has also been a finalist for the IHG award for short fiction, the British Fantasy Award for best novella, and a semifinalist for the Nebula and Writers of the Future awards. His stories have appeared in anthologies that have won the Bram Stoker Award and the World Fantasy Award. Two of his works were optioned for film, the novella “Black Tide” and short story “Crisis Line.”

Stone recently retired after a 41-year career in journalism. He won numerous awards for his work, and in 1986 was named Florida’s best columnist in his circulation division by the Florida Society of Newspaper Editors. In 2001 he received an honorable mention from the National Lesbian and Gay Journalists Association for his essay “When Freedom of Speech Ends” and in 2003 he was voted Best of the Best in the category of columnists by Emerald Coast Magazine. He participated in book signings and awareness campaigns, and was a guest on local television and radio programs.

As an addendum, Stone is single, kills tomatoes and morning glories with ruthless efficiency, once tied the stem of a cocktail cherry in a knot with his tongue, and carries a permanent scar on his chest after having been shot with a paintball gun. He’s in his 60s as of this writing but doesn’t look a day over 94.

Contact Del at [email protected]. He is also on Facebook, twitter, Pinterest, tumblr, TikTok, and Instagram. Visit his website at delstonejr.com .