As are being touted as a business plan for the world, we feel compelled to provide further education on what tariffs are and their impact.
- What exactly is a tariff?
Years ago, Congress passed the Smoot-Hawley Tariff Act, which had a lasting, negative impact. While I won’t elaborate on the full history of the tariff, please refer to these links (Fordham Journal of Corporate & Financial Law and the U.S. Senate) for further historical and background information.
The concept of a tariff is to protect workers in a certain country. The real effect is to add cost to products and inhibit trade between nations.
- Can a politician claim to be fighting inflation and yet support tariffs?
This would be like going on a 100% chocolate diet while trying to lose weight. While it might put a smile on your face, it will not yield the desired results.
- WHO pays the tariff?
Regardless of how they are structured, the customer will pay higher prices due to the tariff. A businessperson will not eat the additional cost of a tariff.
- Who will RECEIVE the tariff?
The U.S. Government will receive the tariff, in the instance of U.S. Government putting the tariff on products.
American consumers have to pay the tariffs and the money goes to the U.S. Government. It is a tax which is confiscatory because it is on those who can least afford to pay it. If you have an income of less than $200,000, this will hit you hard. If you have an income of $100,000, it will hit you harder as a greater percent of your income. If your income is less than $50,000, this will hurt you the most.
Tariffs are a tax waged on consumers.
- So how can you be taxed on an item as a tariff, and yet hope that this will be anti-inflationary?
A tariff being anti-inflationary is a lie; it is a plan for disaster.
The tariffs being imposed this week will have not only a far-reaching effect, but a negative one. Tariffs are never unilateral, and other countries always respond. I felt personally compelled to write this post to educate others on this important issue as the tariffs will impact all of us and our country.
Randy L. Shank, CPA, President
Shank & Company, CPA