Image Source: Pixabay
 

The tariff circus is still in town, and the ticket prices are rising. Walmart announced last week that it would raise some consumer prices as a result of higher costs due to tariffs. The announcement provoked howls of anger from President Trump in a similar fashion (more outlandish) to Elizabeth Warren and others who are accusing large merchants of "squeezing customers" in order to "increase profits".

Circuses have clowns, and this one certainly has its share. Unfortunately, these clowns (including the President's trade advisor, Peter Navarro) are not funny. The buffoonery and ignorance is scary. 

I keep asking myself "Why?". Does the administration really think there will be positive results from tariffs? There is no historical precedent for that. Tariffs don't work.

Some have said that the purpose is to drive other countries (some of them? all of them?) to the negotiating table. Part of that argument has to do with national security threats. I understand the concern about China, but President Trump seems to be hellbent on crushing anyone who exports to the U.S.  Are Canada, Mexico, and Vietnam favorable trading partners or archenemies? 

If there is an ulterior motive that is noteworthy or justified in theory, the practical and matter-of-fact history and results of tariffs must be considered. Tariffs are taxes on purchases by a country's own citizens from suppliers in other countries. Tariffs imposed by the U.S. raise the cost of goods and services for its own businesses and consumers. 

In plain terms, how many times can you shoot yourself in the foot without suffering irreparable harm? We may be about to find out. 
 

Fair Trade Is Free Trade

In order to have free trade, there has to be an absence of regulations and restrictions. For those who might be quick to ask about smuggling and other nefarious activities, please explain how that continues to happen even now under the burdensome regulatory atmosphere that exists.  

Free trade happens when transactions take place between willing buyers and sellers at an agreed upon price. The transaction is independent of any referees, judges, assessors, etc. In other words, the trade is "free" of regulation and interference. 

Fair trade is another name for free trade. 
 

Conclusion

It does not matter who the President is or what his intentions are. Nor, does it matter what the President's political party affiliation is. Tariffs are taxes. Tariffs are an impediment to free (fair) trade and a drag on economic activity. 

Investors are about to learn a painful and costly history lesson that might have been avoided. (also see Tariffs Are Not Inflationary and The Looming Threat Of Credit Collapse and Deflation) 

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Tariffs Are Not Inflationary
The Looming Threat Of Credit Collapse And Deflation
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