POWER MOVES: Don't be ignorant about Tariffs

Ah, tariffs, tariffs, TARIFFS! The word dominates the news as the current US President has been dealing out tariffs like a Vegas card shark.  But tariffs an be used by any country. Then is can become a stressful, dangerous economic dance where governments waltz with trade policies, and we, the naive, ill-informed taxpayers, end up tripping over our own wallets.

Now let's get real about this powerful economic tool that can also be used as an economic weapon if rolled out improperly and without a complete long term comprehensive and effective strategy. In the real world, very few people, even professionals and college grads can't tell you what Tariffs are and why, how and when to use them.

In simple terms, a tariff is a tax placed on goods when they cross national borders, specifically when they are imported into a country, often calculated as a percentage of the goods' value. When a tariff is placed on an imported good, the price of that good will likely increase for consumers. 

Businesses that rely on imported goods may have to pay higher costs, which can impact their profits and competitiveness. When one country imposes tariffs on another country's goods, the other country may retaliate by imposing tariffs on goods from the first country, leading to a trade war. While they can offer short-term benefits to domestic industries, economists generally view them as harmful to the overall economy, leading to higher prices, reduced trade, and potential retaliation. This is what we’re seeing. Don’t complain. Seemingly uninformed US voters elected this option when they voted in 2024.

History is rife with tariff tales. The infamous Smoot-Hawley Tariff Act of 1930 came about to protect American farmers when Congress hiked tariffs to sky-high levels. The result? A global trade war that deepened the Great Depression. It’s like trying to put out a fire with gasoline – well-intentioned, perhaps, but spectacularly counter productive.

It’s not just about paying more, sometimes, it’s about losing out entirely. When one country raises tariffs, others often retaliate, leading to a tit-for-tat trade war. Our own businesses, trying to export goods, find themselves facing higher barriers, and suddenly, those jobs we were trying to protect are under threat. It's like a global game of chicken, with everyone swerving towards economic potholes. Tariffs, while sometimes necessary, are a blunt instrument, often doing more harm than good.

So, the next time you see a price tag that makes you do a double-take, remember the tariff tango. It's a reminder that in the world of economics, sometimes, the music stops, and we’re left paying the piper and this piper may have a really big price tag.

Tariffs, taxes on imported goods, have a long history, evolving from revenue-raising measures to tools for protecting domestic industries and shaping international trade.

But how did it begin? Initially, tariffs were used primarily to generate income for the government, especially in the early years of the U.S.

Later, they became instruments for shielding domestic industries from foreign competition, particularly in the 19th century.

After World War II, the focus shifted towards trade liberalization, leading to a decline in the importance of tariffs, according to the History Channel. However, tariffs have seen a resurgence in recent years, especially in the context of trade disputes and economic policies. 

Stay tuned for updates as the tariff confusion takes shape and evolves. We'll be watching on its impact on business, consumers and the economy.