Tariffs

A tariff is a tax on international transactions. It makes transactions more expensive for those involved. The seller must pay a tax to the government. This cost is in turn passed on partially or entirely to the buyer.

If there is a tariff on steel. Domestic producers of products using steel will see their costs rise. Producers of cars and appliances will suffer. If there is a tariff on yarns, domestic producers of yarn products suffer. The immediate result of tariffs is in this way a hit to the domestic economy.

Domestic producers of steel and yarns, supposedly protected by tariffs, will not gain nearly as much as many think because those using their products are forced to cut back production. Instead of a surge in demand for domestic steel and yarns, there will be layoffs in industries using these input factors.

Tariffs on finished consumer goods will have a similar adverse effect. If imported shoes get hit by tariffs, shoes will become more expensive for consumers. This in turn, leads to less money to use on other things. People will not only cut back spending on shoes. They will cut back spending on all sorts of products and services. A tariff on shoes may very well result in a hit for restaurants.

There is no way a tax can be used to increase prosperity. Simple logic dictates this, and history shows this to be true.

The Tariff Man