Let Me Explain Tariffs

So, tariffs. They're obviously a hot topic right now, because the US is on the brink of embracing them lovingly and making them central to our foreign and economic policy. And the internet is in a war over it.

That's why I wanted to break down what tariffs actually are and what they do to prices.

So what are tariffs? Tariffs are taxes paid by importers. If X in America buys something from Y in another country, a tariff would mean that X has to pay a tax if they want to keep importing stuff from Y.

There's two major reasons someone would want tariffs.

• Making more domestic jobs: A tariff obviously doesn't apply to stuff made in America, so if buying from Y is more expensive than buying from domestic industries, companies will start buying from domestic producers instead of foreign ones. This means that domestic producers make more money and get to expand and create jobs for American workers.

• Relying less on other countries: We obviously don't want to be dependent on other countries for things like food and steel, because what if something happens in those places? We also don't want other countries to have bargaining chips to hold over our heads. Helping domestic producers solves both those problems.

Tariffs have a dark side, though (unfortunately, the dark side doesn't have cookies). It's because any company wants to make money. If they have to pay taxes to buy stuff from foreign importers, they could just go and raise prices when they sell to you. They'll basically screw you over so that they don't get screwed over.

Some people on the internet war don't think the above is true: they droning on and on about how the increase in domestic industry caused by tariffs would cancel out the decrease in supply caused by less importing, making for no inflation. This just isn't true. (Somebody bring out the lie detector, please).

If a country wants to implement tariffs in the first place, then it probably doesn't have the amount of domestic industry it wants. (That's why it's implementing tariffs, you silly goof). If the domestic industry is weak, companies won't want to switch to it. 

The industry in America just might not have enough goods to go around. It might not be successful enough to be able to lower prices enough to entice companies that are used to cheaper foreign imports.

Companies would rather just raise prices and take the easy way out (like you want to take the easy way out on whatever you're procrastinating on right now).

How do we solve that? By using the revenue from tariffs to make our domestic producers stronger. We can use the revenue to give a tax cut to domestic producers, making it easier for them to lower prices and be attractive to companies.

Instead of harming the people in our own country, let's help them. Instead of lying to domestic producers and saying that tariffs will be their ultimate savior, let's actually give the benefit to them instead of letting the government hoard the money.

Let's not be the stereotypical fantasy villain, please.

If we just let them have more free money (without the government telling them what to do with it), then they'll actually be competitive. We'll actually become less dependent on other countries. We might actually make jobs for American workers.

Now, about those cookies...