Letter from Chip Northrup

A Lesson on ‘Tariffs 201’

The economic justification of tariffs is that they will enable domestic producers to compete with cheaper foreign products. That might work if the domestic cost of production is close to the foreign producer’s cost. If the foreign producer, such as China, can produce a product at substantially less than U.S. producers, then the tariff will only cause prices to rise without bringing any jobs back to the U.S.

For instance, if a T-shirt costs $10.00 to make in the U.S. and $4.00 to make in China, in order for the U.S. T-shirt to be competitive in price to the Chinese shirt, the tariff would have to be 150 percent so that the $4.00 Chinese shirt costs $10.00 with the tariff tacked on.

Trump’s 10 percent tariff on Chinese goods will not bring jobs back to the U.S. But they will raise prices at Dollar General to Dollar And A Dime General. If dimes still exist. In order for U.S. products to replace Chinese products, the tariff would result in Two Dollars And Fifty Cents General. The Trump tariffs are not about bringing jobs back. They are primarily a national sales tax hiding in plain sight—as called for in Project 2025.

The smart way to do tariffs is to focus on products that are competitively manufactured in the U.S. or that are made competitively in countries where we already have a favorable balance of payments. That’s Tariffs 201.

Chip Northrup
Cooperstown