Ed Satalia

State College

Based on his campaign promise to increase tariffs across the board, it seems Donald Trump doesn’t understand how tariffs work.

When a product is manufactured in a foreign country and imported into America, the importer buys the product from the manufacturer, sells it to a distributor, who sells it to a retailer, who sells it to the consumer. If a tariff has been placed on the product, the importer pays the tariff to the U.S. Treasury, then passes the costs of the product and the tariff down the line to the consumer.

Trump claims that tariffs placed on Chinese-manufactured goods are somehow “paid by China.” (He doesn’t specify if the payor is the Chinese manufacturer, the Chinese Central Bank or the Chinese Government.) He brags about how he’ll get China to pay the tariff, much like how Mexico would pay for the wall.

He clearly doesn’t understand.

Imposing tariffs on foreign-made goods simply increases the cost of imported products for American consumers, which is the purpose of tariffs.

The idea is to make the foreign-made product more expensive than its American-made counterpart, thereby incentivizing consumers to “buy American.” However, whenever there’s no American-made product of comparable quality, consumers bite the bullet and pay the tariff.

News reports tell us that a new Trump Administration would consider eliminating the federal income tax, replacing the lost tax revenue with tariff revenue. The American taxpayer no longer pays tax, and the replacing tariff revenue is paid by China! What genius!

There’s good reason no one proposed this before.