By: MH, Contributor
As citizens of the United States, we have a civic duty and a right to vote. Many of us cannot seem to get that seemingly simple job done though, so it is no surprise that a large number of the population forgets that they should also be not just voters, but informed voters. Admittedly, being a completely informed voter is nearly an impossible task. Even our noble representatives in Congress do not fully read through and understand the bills that they plan to vote on after they have courteously been placed on their desks by various lobbyists, but that’s an issue for another article. My current grievance lies with the fact that two days after Election Day, the amount of Google searches for the word “tariff” was over six times higher than two days prior to Election Day.
At this point, I can spare everyone an internet search and say that tariffs are taxes imposed on imported goods as they come into the country. For example, let’s say that a one-pound bag of coffee comes into a U.S. port from Columbia. This bag might have cost Starbucks $10 to buy from their supplier, and the import tax would be a percentage of that cost. So, if Starbucks kindly hands the government a crisp $1 bill to cover that tax, Starbucks would now value their bag of delicious coffee at $11, up from $10.
Now to the important part – one of Trump’s main tax platforms is the idea that he will try to implement at least a 10% tariff on all imports and a 60% tariff on all Chinese imports. For some unfathomable reason, there seems to have been some confusion from many of those who voted for Trump on who tariffs really effect. I have seen claims and stories that some of those staunchly red supporters believed that the exporting country – Columbia in my prior example – would, for some reason, pay the new tariffs. Others naively thought, if they understood who initially pays a tariff, that the importing business would simply eat the additional cost of bringing inventory into the country.
Unfortunately for us, neither of those fantasies are true. We, the consumers, will be paying these new tariffs. Quite simply, if the cost of selling goods increases, then the costs for consumers buying those goods will see a similar increase. We will be paying for the extra $1 that Starbucks paid for those imaginary imported coffee beans. One article from The Washington Post from Oct. 26 cited an estimated additional cost of $2,600 to the average middle-class family, directly caused by Trump’s planned import taxes. While I would personally like to see the numbers that went into that figure, I can agree with the sentiment that the additional tax’s burden on the average person could be crushing.
Please, take a moment to think of everyday items or foods that we source from other countries. Have you recently had any coffee to feed your crippling addiction? If you’re like me, then you might be considering having your second for the day. Another quick Google search will show that the U.S. imports over $8 billion worth of coffee each year. A tariff of 10% would add about $800 million to that initial cost of $8 billion. Luckily, Hawaii produces some fantastic coffee beans that we can all get tariff-free. Tragically, Hawaii only produces about 1% of the volume of coffee that is consumed in the country.
These new tariffs will also be impacting many products from factories in the U.S., such as literally all “American-made” cars that use foreign components and materials that simply cannot be sourced from America.
I now want to inform everyone about the basic principles of taxation. We can broadly place different taxes into two categories: progressive and regressive.
With progressive taxes, the amount of tax that an individual owes increases proportionally with their total income. Our income tax brackets and their marginal increases are a perfect example of this. The more you make, the higher percentage of your income is taxed.
With regressive taxes, the tax burden disproportionately affects low-income individuals. Tariffs are generally regressive taxes since the costs flow down to the consumer.
If I buy a coffee made with imported beans, I might be covering 10 cents of the import tax on those beans. If a certain felon with distinct hair buys that same coffee and pays that same extra 10 cents, then we have both essentially been taxed 10 cents. 10 cents is a much larger percentage of my yearly income than it is of Donald Trump’s yearly income. This number may seem small, but an extra 10 cents every day for a whole year will add up to $36.50. This is another small number, but I really do hope you get the point that I’m trying to make.
Overall, I just wish that I did not feel compelled to write this article on tariffs. I wish that many of my fellow Americans had been better informed of how Trump’s policies would affect them, because many of them clearly did not care about how some of his policies would impact others. No matter how we all voted or the reasoning that went into filling in those dots on the ballot, I would challenge all of us, including myself, to be better informed.
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