The Dark Side of Tariffs

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In my last essay (More Competition, Higher Quality), I wrote that tariffs were not good for the countries. It is interesting to note that we allow free trade (tax free) from state to state thinking it is good for the country, but complain when the trade is made from country to country. We have been taught or told that jobs are reduced when companies from other nations compete better in our own nation. This is why laws are passed down by the money of businesses that make it harder for trade to be made due to the tariffs (taxes) imposed on them.

Some of the arguments that are told favoring tariffs are the following. They, as you will see, are not backed up.

People confuse immigration with imports. Notwithstanding, goods don’t vote. It is different when a person crosses the nation and has a mind of his own, than when a good crosses without being able to think for itself. Goods don’t bring cultures, and they do not make decisions. Goods are only tools that can be used to improve the lives of people.

“Keep the money and jobs at home.” They say people lose their jobs, because of their failure to compete better. The truth is more jobs will be made, because of export companies. Not only that, but customers would live a more abundant life, because of the reduced costs. Even if jobs are lost, others gained. It is also better for a company that is not serving you with good quality, and honesty as a customer to close up.

I would like you to think about this. People need money, and they get it by working. This means that they serve customers, and in order to keep the customers happy and their wallets big, they must produce goods with a higher quality. However, there is too much competition which makes it harder for businesses to compete, some may even go bankrupt. So they think, if competition is reduced, their lives would be easier.

This is when they pay congress to make laws (tariffs/taxes) that favor them, and reduce competition. What happens when there is no competition? What if you were the only person selling milk in your town? You would be able to charge a very high price, because of the demand. Though, it wouldn’t have to be of good quality, because customers have no other choice than to buy from you. What if the public found out that there is someone else from a close town selling milk with a better quality and a lower price? They would realize that you were ripping them off. From whom would they prefer to buy? Suddenly, you get mad. You need to find a way that would force the public to buy from you, even though you’re ripping them off. You go on to paying the mayor of the town, for him to pass a law imposing a tariff (tax), that would make it harder for the other milk seller to sell his milk in your town. Even if the other seller gets to sell his milk in your town, the milk would cost more than yours, because of the tax imposed on him. Then more people would buy from you, and customers would suffer from a reduced quality in their living standards.

In this analogy, I want you to realize that it wasn’t towns that were trading, but it was two people. Nations don’t trade, people do.

I also want you to see that when imports are reduced, exports are reduced. Gains are lost from other the nation, but also from your nation. Why? When you impose a tax on the other nation making harder for it sell on your nation, profit is reduced. When the other nation’s profit is lowered, it will not have enough money to buy from your exported goods. Therefore, you will not be able to sell as much in the other nation either. Both sides lose.

Now, if you still have the ego way of thinking that says “they’re not us”, what if they did it to you? What if it was the other way around? What if it was your nation that would have to pay high taxes in order for you to sell on other nations?

Tariffs reduce imports and they reduce exports. With tariffs both sides lose. They offer a low standard of living. The only winners are the bureaucrats and the businessmen that payed the bureaucrats. The question is, will you keep favoring tariffs (taxes)?

The Government or The Public? Make Your Choice! Part:I 

Categories: Economics | Tags: , , , , , | 3 Comments

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3 thoughts on “The Dark Side of Tariffs

  1. jimfinn2000

    Reblogged this on The Vine Vigil.

    Liked by 1 person

  2. I only wish that a country like China, with it’s horrible record on human rights, did not receive “most favored trade nation” status from our own corrupt government. When our politicians use tariffs to pick and choose winners – we all suffer.

    Liked by 1 person

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