Federal Tariffs and Local Effects

Federal Tariffs and Local Effects

 

Tariffs have been in the news quite a bit lately, so here is a short tutorial about what they are and how they affect all of us across the country and particularly here in South Carolina.

What is a tariff? The web site reference.com defines a tariff as “a tax imposed on goods and services imported from another country.” They are in the news because we as a nation have raised such taxes on some goods and services. Normally it takes an act of Congress to impose or to raise a federal tax, but there is a loophole: by an act of Congress, the President may impose tariffs if “an article is being imported into the United States in such quantities or under such circumstances as to threaten or impair the national security.” President Trump is the first President ever to have used that loophole to impose tariffs without asking the consent of Congress, and he has stretched the meaning of “national security” a very long way. There are now new or newly increased Trump tariffs on several trade categories including solar panels, washing machines, automobiles, steel and aluminum, newsprint, and electronics.

Do those foreign countries pay us the tariffs? No, exporting countries never pay tariffs. Tariffs are paid by those Americans who buy the imports. Often what happens is that the imported product including the tariff is priced out of the market, so either the purchaser doesn’t buy it at all or buys it from someplace else – perhaps buying U.S.-made products instead. That helps our product producers, who can now charge consumers more than what the foreign imports used to cost and still charge the same or less than the raised foreign product price. The net result in either case is a higher cost to you and me.

How else do tariffs affect us? If you have been reading The Edgefield Advertiser, you know that among the products that now cost more due to Trump tariffs is the paper stock this very newspaper is printed on. To keep the price to subscribers from going up, either the newspaper has to shrink or there will need to be less news and more advertisements. I teach at Augusta University, where the Georgia legislature set aside funding for a not-yet-built Math/Science building. But that legislated dollar amount now has to pay for more expensive steel and aluminum, so our new building just got smaller before construction has even begun. The TV-maker Element Electronics in Fairfield County will close its Winnsboro plant due to more expensive component parts because of the Trump tariffs, laying off 126 employees. The largest automobile factory in the United States measured by number of employees is the BMW plant in Greer. But that may not continue to be the case. BMW is a German-owned company and Americans who buy BMW’s made in Greer will be affected by the Trump tariff. Many will decide to buy a different car instead. BMW predicts their sales will go down and projects laying off 10,000 South Carolinians in Spartanburg County. In Winnsboro and Greer, South Carolinians will be out of work due to Trump tariffs.

What can we do about these Trump tariffs that truly affect us all? Congress passed the law allowing this loophole, and Congress can close that loophole with another law. If you don’t like these new taxes (for that’s what tariffs are), then hold our federal legislative delegation responsible. Ask Congressman Duncan, who is running for reelection again this year what he plans to do about them. Ask our Senators, too, who aren’t running this year but will be two and four years hence.

I’m against these Trump tariffs. Are you?

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