Time to Kill All Tariffs 

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

It’s not often you get a politician to admit they might be wrong on an issue, but that’s actually what happened recently, and of all things, it happened on the subject of tariffs. 

Now, I have long been an opponent of tariffs, as they are essentially a tool used by government that punishes its citizens by making them pay more for goods. Moreover, they are a violation of the free-market principles by which I think economies should be structured around. 

I was an ardent opponent of the tariffs former President Donald Trump imposed on steel and aluminum, and I am equally opposed to those same tariffs that President Joe Biden has left in place.

The fact is that tariffs of all kinds, in addition to being immoral tools of control used by government, also raise prices on goods. And given the current, multi-decade high in inflation, it’s time for tariffs to disappear. 

Incredibly, one Biden administration official at least partially agrees with me. Her name is Gina Raimondo, and she also happens to be the Secretary of Commerce.

Now, hat tip to my friends at Reason.com for alerting me to this issue, and particularly writer Eric Boehm. In his article “Tariffs Are Adding to Inflation. Biden’s Commerce Secretary Says Repealing Some ‘May Make Sense.’”, Boehm points out that when asked during a CNN interview whether the administration would consider rolling back some tariffs to fight inflation, Raimondo admitted that it “may make sense” to do that.

Of course, this small nod to reality also came along with additional bad ideas from Raimondo, who in virtually the same breath suggested that the Trump-imposed tariffs on steel and aluminum would remain in place, “because we need to protect American workers and we need to protect our steel industry; it’s a matter of national security.”

One thing to note here is that whenever a government wants to impose controls on its citizens, it will do so either A) in the name of national security or B) in the name of protecting children. And as a general rule, most policies designed to control the populace neither add to national security nor protect children.

There is, however, a silver lining in this cloudy thinking by Raimondo. In that same interview, she admitted that aside from aluminum and steel, there are other products where it might make sense to remove tariffs, items such as household goods, bicycles, and other goods. Raimondo said, “I know the president is looking at that.”

Well, it’s a good thing the president is looking at that, because his earlier proposals to tackle inflation, which he released on a speech on May 10, will do nothing to combat inflation. Bromide notions of taxing the most successful in our society to bring down the deficit by making them “pay their fair share” and “investing” in alternative energy with taxpayer money are both pro-inflationary, not to mention a further immoral imposition on citizens. 

But just how much are those tariffs costing Americans? As Boehm points out, “The set of tariffs imposed by Trump and maintained by Biden — including those on steel and aluminum, along with a host of imports from China — is applied to approximately $280 billion of imports every year. Those import taxes add about $51 billion annually to Americans’ consumer costs, according to an analysis by the American Action Forum, a pro-market think tank.”

Boehm included the chart here in the American Action Forum analysis that breaks down that nearly $51 billion of additional cost burden created by these tariffs.

Of course, the solution to inflation isn’t just to eliminate tariffs. The problem is a whole lot bigger than that, and even beginning to tackle the issue in earnest would require a new paradigm regarding how we look at both monetary and fiscal policy. 

Yet one thing is certainly true here, and that is tariffs are a penalty on taxpayers — a penalty that raises prices, because that’s precisely what tariffs are designed to do. 

So, if you want to combat inflation, start with an easy, baby step that is both rational and moral — kill all tariffs!

*****************************************************************

Moore Wisdom 

“In almost every case, whenever a tariff or quota is imposed on imports, that tax is strongly supported by the domestic industry getting the protective shield from lower-priced foreign competition. The sugar industry supports sugar tariffs; textile mills lobby for tariffs on foreign clothing.”

— Stephen Moore

Economist Stephen Moore knows of what he speaks when it comes to free markets, and here he confirms this week’s theme with an additional point about tariffs, and particularly how those already in positions of strong market share support the protective and punitive effects of these pernicious policy instruments. 

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

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