Witt: Tariffs shouldn’t be form of punishment
Tariff. A word that finds its origins in the Arabic language ta’rif, meaning information.
The word came into more common usage in the 1590s and meant “arithmetical tables.”
Today, a tariff is an excise tax imposed by one country against the product or products of another country.
Tariffs were the main means of government funding in the U.S. virtually from its beginning, the first official tariff being levied in 1789.
One of the most infamous tariffs passed by the U.S. was the Tariff of Abominations of 1828. Originally proposed during the administration of John Quincy Adams, it was passed and signed by President Andrew Jackson.
This tariff was an early signal of the schism which existed between northern and southern states and which culminated in the Civil War.
The north, being more industrialized, wanted to encourage emerging industry and making imports more costly was one method of protecting those young entities.
In the south, which was supplying many of the basic materials for manufacture, higher tariffs meant foreign buyers would be less inclined to purchase those materials because they were paying higher prices to get their goods into the country.
Free states voted 88 to 29 in favor of the new tariff; slave states voted 65 to 17 against it.
Following this imposition of substantially higher tariffs, those same import duties continued a slow decline through the remainder of the 19th Century and into the 20th.
But tariffs were the main source of revenue to the federal government until 1914.
Since 1935, tariffs have continued to become a declining percentage of federal tax income.
Tariffs are generally described as being of five types: specific tariffs (directed against certain goods), ad valorem tariffs (a percentage of the cost of the product), licenses, voluntary export restraints and local content requirements.
All of these are designed to either constrain the importation of certain items or to facilitate the development of national enterprise.
The very earliest tariffs were essentially of this latter ilk; they were used to encourage the creation of local and regional manufacturing to produce goods which had been largely purchased from abroad (mainly England).
Interestingly, members of the World Trade Organization are required to impose tariffs at the same level for all other WTO trading partners.
Now for the great lie: “China (France, England, Sweden, pick the country) will pay the tariffs imposed on it.”
The truth is the consumers of goods — no matter the origin of those goods — are the ones who pay tariffs.
It is patently ridiculous to suggest some foreign manufacturer is going to voluntarily accept a diminution of its profit when a tariff increases the cost of that product.
Unless, of course, the ultimate consumer ceases or vastly reduces his or her purchase of the product.
In which case, the manufacturer will likely adjust the price, at least to the point of maintaining a profit at some level.
Both these conditions exhibited themselves when tariffs were increased on a number of Chinese goods. American car, appliance and motorcycle manufacturers were faced with either paying higher prices for imported steel, or cutting manufacturing.
American farmers were faced with reduced international demand for farm products as a retaliatory measure for increased American tariffs.
Tariffs are probably a necessary adjunct to international trade, but using them as a punitive device only ultimately hurts the consumer.
Chuck Witt is a retired architect and a lifelong resident of Winchester. He can be reached at chuck740@bellsouth.net.