Dale Wyngarden: Who pays tariffs? It might surprise you.
Next time your friend or relative gloats over tariffs, thinking we’re sticking it to foreign countries, don’t bother trying to convince them we’re really sticking it to ourselves. They don’t know better, don’t care and probably wouldn’t believe you if you told them otherwise.
EDITOR'S NOTE: The views and opinions expressed are those of the writer and not of Ottawa News Network.
Do you have friends or relatives that believe that 15% tariffs on Japan or the European Union are actually paid by Japan or the European Union? Or by manufacturers in those trading partners? Well, they aren’t.
Tariffs are an American tax, collected by our government, and paid by American businesses when foreign products are off-loaded on American soil. These businesses may absorb some of the tariffs, but more likely they’re priced into the products we buy, and paid by us, the consumer.
So if it’s actually us paying the tariff, how is it hurting foreign countries and manufacturers? Well, the theory is that increasing the cost of foreign products will make domestic competitors more attractive, and we’ll buy American. Sounds good in theory, but what if there are no domestic alternatives? Then a tariff simply becomes another federal tax on Americans.
Take televisions, for example. TV started surging from a luxury to an essential household item back in 1947 when Earl Muntz began marketing his 14-inch black and white Muntz TV for under a hundred dollars. The latter half of the past century saw an explosion of American-made televisions. Old timers will recognize brands like Crosley, Admiral, Curtis Mathes, GE, Magnavox, Philco, DuMont, Motorola, Sylvania, RCA, Emerson, and Zenith. One by one, these once-famous manufacturers were acquired by foreign companies or simply folded in the face of foreign — mostly Asian — competition. Zenith was the last television made in America. It was acquired by a Korean conglomerate named Lucky Goldstar in 1995 and ended domestic production by 1999. About the same time, Lucky Goldstar shortened its name to simply LG.
So anyone thinking a tariff is a poke in the eye to foreign TV companies, or will induce us to buy American televisions, is wrong on both counts. There is no American alternative. It is just another tax, and if it’s a punishment to anyone, it’s us. The TV someone bought last year for $800 will now cost $920. We pay the increase, and our government in Washington collects.
There are, of course, American-made consumer products that offer competitive alternatives to foreign-made. Think automobiles and appliances. A 15 percent tax on imports might in fact achieve one of the goals of tariffs by slowing imports and boosting sales of American-made made. Another goal is to induce foreign companies to move manufacturing to our country. The Honda Passport, Honda Ridgeline and Volkswagen ID are made in the U.S., and in fact are three of the top four “Most American Cars.” LG, a family-owned Korean conglomerate known for TVs, is also a major manufacturer of domestic appliances, with a sizeable factory in Tennessee. And we well know where they’ve chosen to build lithium car batteries.
With tariffs being taxes paid by American consumers, we are simply reaping what we sowed. American industries moved manufacturing to foreign countries as they chased cheaper labor. Companies made more money, stockholders were happy and consumers relished the affordability of American products made by cheaper labor offshore. We watched our competitive edge ebb away. Today, Japan and the European Union acquiesce to 15% tariffs with a promise not to retaliate because they know even with that added tax, domestic production still can’t compete. We’ll continue to buy foreign, Uncle Sam will jack up prices with a tax they pretend is a punishment on foreign countries, and you and I will pay.
So next time your friend or relative gloats over tariffs, thinking we’re sticking it to foreign countries, don’t bother trying to convince them we’re really sticking it to ourselves. They don’t know better, don’t care and probably wouldn’t believe you if you told them otherwise. And skip the grumbling. We’re just getting what we voted for.
— Community Columnist Dale Wyngarden is a resident of the city of Holland. He can be reached at wyngarden@ameritech.net.
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