What did the McKinley Tariff do?
The McKinley Tariff Act of 1890 increased the taxes on most imported goods while eliminating taxes on luxury items. The intent was to protect American industries from foreign competition. The outcome was that domestic businesses raised the prices of American products to unaffordable rates.
source https://study.com/academy/lesson/the-mckinley-tariff-of-1890.html
If you google anything related to Tariffs, the fake news and fake academia studies are working hard to slander McKinley and Trump.
Ppl around me are assuming tariffs will increase the price of imports/goods that we cannot afford anymore.
Sounds like bullshit to me, many countries that ripped us off on trade deals, just aren’t gonna get their free lunches anymore. Trump said many countries are hugely reliant on us for many things, like military assistance. Taking that away alone will make them desperate to make better trade deals.
However I’m not too educated on the matter. Could we have a discussion and dig into how tariffs will help is? I wanna educate normies
So yeah what do you guys think?
There are a multiple reasons why a leader might want to slap some tariffs on particular goods coming from various countries. In no particular order as to which are the most important/lucrative/effective/etc.
Option 1. Said country has a stronger production base and the country putting forth tariffs. This allows the country with the weaker production base to better compete. Does it cause the average consumer to have to pay more? Yes, it does, but the cost is generally fairly low and the outcome is keeping the home base economy in that particular sector from further dropping off.
Option 2: Said country has weaker worker protection, so the home country can better compete against the lower cost of production due to lower worker protections. Cost is same as option 1, as is the result. Depending on your political views, this can be good or bad. Some countries, such as China, have nearly no worker protection, so a tariff against that might even be seen as morally the best choice, even if consumers end up paying more.
Option 3: Said country manipulates their currency to achieve better pricing in flooding markets (typically with cheaper and lower quality goods). Does this increase the cost of to the consumer, yes, but usually bolsters the workforce as well. Again, this can be seen as a morally acceptable retaliation against country who manipulate their currency to get a leg up on the competition.
Note: while option 1 might be morally right from one country’s standpoint, it is often seen as morally wrong from the opposite country’s standpoint. Neutral parties will see it less as a moral issue and more as a protectionist issue. Whereas 2 and 3 have one side that is morally right and one side that is morally wrong.
Option 4: Tariffs can be used as a sort of sanction against countries that are behaving badly. As with Options 2 and 3, this is usually a retaliation against something the original country has done wrong. Let’s say Mexico and their lax approach to stopping illegal border crossings into the US.
Option 5: Tariffs can also be used as a bargaining chip. Let’s say that you are New Zealand and you see that Australia is getting too buddy buddy with China, you might say to Australia, “We’re gonna slap a tariff on your imported goods because you are dealing with countries that we view as hostile” and then Australia now has less incentive to deal with China in a way that would negatively effect New Zealand. One could argue that Options 4 and 5 are essentially the same, but generally one is more of a threat against direct action (or inaction in the Mexico example) whereas Option 5 is more about a general approach toward other countries and who they actively trade with.
Option 6: Trade war. This isn’t so much different than any of the above so much as it is more drastic. Options 1-5 rarely see tariffs reach into the high double digits, but trade wars can see tariffs hitting into the triple digits. This is basically the last step before a full on trade embargo. You hit them so hard with tariffs that they essentially can’t trade with you any longer.
Option 7: Raising funds. Let’s say that you wanted to bring in more money for the government and you didn’t want the average citizen to have to pay. Do you raise the tax rates? You can, but what if you didn’t have to? What if, instead, you could raise tariffs on luxury imports? That’s certainly one approach. Let’s say the average laptop costs 1,500, if you slapped a 10% tariff on the importing of laptops, the cost becomes 1,650. You are hoping that most people who can afford the 1,500 can also afford 1,650. Let’s change this to yachts instead (yes, I know, there are multiple layers to acquiring yachts and importing them is just one example, but that’s the example we will use). Say Billy, pie to the face, Gates decides that he really likes that yacht he saw when he was hanging out with Epstein. Well, said yacht might cost as much as 5 million dollars. Raise the tariffs on yacht imports and bam, you just $500,000 from one transaction alone and that’s just with a 10% tariff. This tariff isn’t likely to harm the economy because Bill “I’d like to vax the whole of Africa with my poison syringe” Gates will buy the yacht even if tariffed to a high extent. Yes, there are ways he can try to get around the tariff, but that’s why you get the experts in to tell you when and where to cap your tariffs.
Note: Tariffs can also be levied as a combination of different Options. You might find that China is better at producing a certain good, manipulating their currency so said good is cheaper, pushing their workers in slave like conditions, and being an all-around bad actor.
Option 8: the retaliation tariff. One might levy a tariff on another country because that country decided to slap you with a tariff. This could be a tariff on the same exact good or a different good.
Pros: Good negotiating tool Can raise lots of funding Can get other countries to stop their bad actions Can protect jobs at home Can force countries to rethink their shady economic dealings with others
Cons: Can drive countries away from wanting to trade with you Can cost consumer extra money Can result in retaliation (such as tariffs or trade wars)
Proper use of tariffs can prove to be an effective measure at combatting bad actors, protecting production at home, drive fairer negotiations, etc. improper usage can tank the economy and reputation of a country.
TLDR: there are numerous reasons for tariffs, including protecting your production base, combatting manipulative countries, negotiating with foreign governments that might not have your best interests in mind, punishing foreign governments for shady practices, retaliating against foreign tariffs, and starting trade wars and more.