Tag Archives: Trade

Donald Trump’s plan to introduce tariffs is just a tax on consumer goods

I have a key that will unlock a puzzling mystery
I have a key that will unlock a puzzling mystery

What are the consequences of adopting tariffs for all of the people who are affected? What happens next, after stage one?

Here’s a lesson in basic economics from Joe Carter, writing for the Acton Institute.

He writes:

Both Sanders and Trump propose increasing tariffs on goods imported from other countries — and increase them significantly.* This isn’t that surprising for Sanders, a socialist who, on the issue of economics, is one of the most ill-informed candidates in modern history. But Trump should (and probably does) understand the detrimental impact tariffs have on the poor. And yet he has proposed an economy-crippling, poverty-increasing tariff.

In 2012, Trump proposed a tariff on China of 25 percent. In 2016 he bumped it up to 45 percent. (He later tried to lie and say he never proposed the 45 percent increase, but there is audio of him making the proposal.) A tariff is simply a tax on imports or exports, so Trump is proposing to raise taxes on imported goods by 25 to 45 percent. (To keep this point in mind, I’ll hereafter refer to tariffs as “taxes.”)

You might be thinking, “ So what? That’s a tax the Chinese have to pay.” But that’s not the way tariffs works. China doesn’t pay the tax — you do. If a tariff on Chinese goods is increased by 25 to 45 percent then you pay 25 to 45 percent more for those goods.

Here’s a way to think about it. Imagine there are two hamburger stands in town. One is owned by the mayor’s wife, Veronica, and one is owned by a woman who lives in the next town over, Betty.

Of the two, Betty makes the tastier burger. She is also able to charge $1 a burger since she is able to buy her supplies in her own hometown for much cheaper. Veronica’s burgers aren’t quite as good and cost more to make. She has to charge $1.30 per burger.

The mayor decides to implement a new tax of 45 percent on producers (like Betty) who don’t live in the city limits. Since Betty’s profit margin is already low, she has to pass the bulk of the 45-cent tax on to her customers. Instead of $1 she now has to charge $1.35.

So who is better off in this scenario? The only winner is Veronica. Since her burgers are now cheaper, she is likely to sell more. And who is worse off? The customers who now have to pay 30 to 35 cents more for every burger. That is money they could have used to buy other products or services. Now they have to spend additional money on this new tax.

The same principle applies to taxes on goods and services imported from other countries. Customers simply have to pay more for goods and services they used to get much cheaper.

To understand how Trump’s tax increase would affect consumers, take a trip to Target or Wal-Mart and add 45 percent to almost all the prices. That’s money that comes directly out of your pocket into the hands of the federal government — all to punish you for buying goods that are cheaper to make in China.

Harvard University economist Greg Mankiw explains what most professional economists agree on. The economic benefit of free trade tied for first place, with 93% agreement:

The recent debate over the stimulus bill has lead some observers to think that economists are hopelessly divided on issues of public policy. That is true regarding business cycle theory and, specifically, the virtues or defects of Keynesian economics. But it is not true more broadly.

My favorite textbook covers business cycle theory toward the end of the book (the last four chapters) precisely because that theory is controversial. I believe it is better to introduce students to economics with topics about which there is more of a professional consensus. In chapter two of the book, I include a table of propositions to which most economists subscribe, based on various polls of the profession. Here is the list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)

  2. Tariffs and import quotas usually reduce general economic welfare. (93%)

He is the author of his “favorite textbook”, which is published by Harvard University Press.

This is not controversial among professional and academic economists. Economists across the ideological spectrum understand that free trade lowers the prices of consumer goods, and allows individuals, families and businesses to get more quality for their dollars. We can do better than Donald Trump and his naive, populist economic pablum.

Related posts

Dr. Jennifer Roback Morse lectures on basic economics

Dr. Jennifer Roback Morse
Dr. Jennifer Roback Morse

Here is a podcast on basic economics from Dr. Jennifer Roback Morse.

About the speaker:

Jennifer Roback Morse, Ph.D. is the founder and President of the Ruth Institute — a project of the National Organization for Marriage — which seeks to promote life-long married love to college students by creating an intellectual and social climate favorable to marriage.

She is also the Senior Research Fellow in Economics at the Acton Institute for the Study of Religion and Liberty.

She is the author of Smart Sex: Finding Life-long Love in a Hook-up World, (2005) and Love and Economics: Why the Laissez-Faire Family Doesn’t Work (2001), recently reissued in paperback, as Love and Economics: It Takes a Family to Raise a Village.

Dr. Morse served as a Research Fellow for Stanford University’s Hoover Institution from 1997-2005. She received her Ph.D. in economics from the University of Rochester in 1980 and spent a postdoctoral year at the University of Chicago during 1979-80. She taught economics at Yale University and George Mason University for 15 years.

The MP3 file is here.


  • The study of economics is anti-postmodern – there is objective truth independent of what people think
  • The study of economics believes in fixed principles of human nature
  • Economics studies the allocation of scarce resources that have alternative uses
  • Economics studies how people exchange resources
  • How both people who engage in a voluntary trade always believe that they will be better off
  • How both people who engage in a voluntary trade both benefit from the exchange
  • How incentives motivate people to act
  • Understanding supply and demand
  • Understanding how “free” government services are rationed
  • Understanding opportunity costs
  • How prices signal producers to produce more or less, and consumers to buy or not buy
  • Market-driven prices versus price controls
  • The role of substitution
  • The necessity of allowing failure in a free market

The requirements of economic growth:

  • private property
  • contracts
  • the profit motive
  • competition
  • free trade
  • entrepreneurship, creativity and innovation
  • the rule of law

If you want to learn more about basic economics, I recommend picking up a book or two by Thomas Sowell – the first book I usually give away is “Intellectuals and Society”, and then next “Basic Economics”.

The Weekly Standard podcasts on Democrats’ terrorists for traitor swap

I listened to these 4 podcasts on the weekend, and I thought there was a lot in there that I had not heard in the news. The Weekly Standard is my favorite political podcast.

June 2nd:

THE WEEKLY STANDARD Podcast with senior writer Stephen F. Hayes on Sgt. Bowe Bergdahl, who was recently traded for five Taliban prisoners from terrorist captivity.

The MP3 file is here.

June 3rd:

THE WEEKLY STANDARD Podcast with Thomas Joscelyn, Senior Fellow at the Foundation for Defense of Democracies and frequent contributor on why the Bergdahl swap is a terrible deal for American Security.

The MP3 file is here.

June 4th:

THE WEEKLY STANDARD Podcast with editor William Kristol on the Obama administration’s changing explanations of the Bergdahl prisoner swap.

The MP3 file is here.

June 6th:

THE WEEKLY STANDARD Podcast with senior writer Stephen F. Hayes on Sgt. Bowe Bergdahl, who was recently traded for five Taliban prisoners from terrorist captivity.

The MP3 file is here.

June 9th:

The WEEKLY STANDARD podcast with senior writer Stephen F. Hayes on his recent story about  how many White House statements about the Bergdahl/Taliban 5 swap have been contradicted either by facts or by testimony.

The MP3 file is here.

I recommend listening to all of them. The VA scandal was bad, because it was basically the Democrats killing off wounded soldiers. But the release of these 5 terrorist commanders goes beyond that – endangering our men and women in the military and just encouraging our enemies to kidnap more Americans and bargain with them. If you want the bad guys to stop being bad, you kill them. You don’t reward them. That just makes them act more badly.


Army told soldiers who served with Bergdahl told to lie about his desertion

Left-wing Mediaite reports.


In an appearance on Fox & Friends on Wednesday, retired Army Spc. Josh Fuller, a soldier who served with Sgt. Bowe Bergdahlsince 2008, said that the military informed him and other soldiers that the “narrative” they should maintain is that Bergdahl was captured by the Taliban rather than that he intentionally left his base. When asked if he believed he was told not to “tell the truth” about Bergdahl by military authorities, Fuller said that he did.

“The sentiment that everybody knew was that he walked off the base in the middle of the night, left all his gear there, and went – just walked off the post,” Fuller said. “So, we had all known that it was — that he had deserted his post, and there was never anything about him getting captured or POW until a little while later whenever it came down from the chain of command that we needed to keep quiet and not say anything.”

“We’re going with the narrative that he was captured,” Fuller said of the military’s position on Bergdahl’s alleged desertion.

“So, they basically told you not to tell the truth,” Fox host Brian Kilmeade said.

“Yes, sir,” Fuller replied.

Fuller concluded by corroborating the claims of Bergdahl’s former team leader, Sgt. Evan Buetow,who told CNN on Tuesday that the Taliban’s attacks became more directed after Bergdahl was captured.

“The ambushes we use, the certain tactics we use, the Taliban was picking up on those things,” Fuller said. “You could tell it was from somebody on the inside that had that info.”

Wow. So we gave away five Taliban commanders not just for a deserter, but for a traitor. Is this supposed to make us safer?


Obama trades five senior Taliban commanders for an American soldier who deserted

The Weekly Standard reports on a prisoner exchange that only a traitor could approve of.


The Obama administration is facing mounting questions about the controversial prisoner swap that freed Army Sgt. Bowe Bergdahl from jihadists in Pakistan in exchange for the transfer and ultimate release of five senior Taliban commanders previously held in Guantanamo Bay, Cuba.

Lawmakers are questioning the wisdom and legality of the move. Intelligence officials are expressing deep concerns about its ramifications. And those who served with Bergdahl—or took risks in the efforts to rescue him—are directly challenging the Obama administration’s characterization of the former captive and his actions.

In an appearance on ABC’s This Week on Sunday, National Security Adviser Susan Rice claimed that Bergdahl “wasn’t simply a hostage, he was an American prisoner of war, taken on the battlefield.” She added: “He served the United States with honor and distinction.”

“That’s not true,” says Specialist Cody Full, who served in the same platoon as Bergdahl, and whose tweets over the weekend as @CodyFNfootball offered an early firsthand account of Bergdahl’s departure. “He was not a hero. What he did was not honorable. He knowingly deserted and put thousands of people in danger because he did. We swore to an oath and we upheld ours. He did not.”

“He walked off—and ‘walked off’ is a nice way to put it,” says Specialist Josh Cornelison, the medic in Bergdahl’s platoon. “He was accounted for late that afternoon. He very specifically planned to walk out in the middle of the night.”

“He was a deserter,” says Specialist Full. “There’s no question in the minds of anyone in our platoon.”

But Susan Rice says this 5 for 1 trade is a good deal. Should we take her word over the word of the soldiers who served with Bergdahl? I think we shouldn’t, because we know she lied about the Benghazi terrorist attack being a “protest” caused by a Youtube video.

The Washington Times points out that other soldiers lost their lives trying to search for the deserter.


At least six soldiers died while searching for Sgt. Bowe Bergdhal in hostile Taliban territory when he went missing in Afghanistan five years ago.

And now, those who served with those six say Mr. Bergdhal is at fault for their deaths because he abandoned his military post, the New York Post reported.

“I was pissed off then and I am even more so now with everything going on,” said former Sgt. Matt Vierkant, a member of Mr. Bergdahl’s platoon, to CNN. “Bowe Bergdahl deserted during a time of war and his fellow Americans lost their lives searching for him.”

I think the release of 5 Taliban commanders is probably going to cost even more American lives than the 6 already lost. But judging from the administration’s actions with the VA scandal and Benghazi, we seem to be more concerned with helping our enemies than with helping our own soldiers and diplomats. And I’m sure on the left they would think that this was a good thing, somehow. I don’t think it’s a good thing.