How Tariffs Work (No, Not Really)

Imagine a ship on the sea.

 

It’s a big ship, as big as a city almost and it’s loaded down with stuff.

 

Boxes and crates fill the storage holds and spills out to form skyscrapers made of boxes on the deck of this massive ship.

 

Adorning each box, each crate are three words: Made. In. China.

 

This immensely large ship cleaves the ocean waters as it approaches the shores of the United States of America.

 

The massive ship enters a harbor and abuts an equally massive dock.

 

There stands… a wizard, in a flowing robe, his hand firmly grasping an ancient staff of wisdom and power.

 

The captain of the ship descends to the dock and greets the wizard.

 

“Greetings from China,” the captain says to wizard. “We have come with bountiful and wondrous goods that we seek to sell to the good and noble citizens of  the United States of America.”

 

The wizard strikes the staff upon the dock and frowns as he responds to the captain with a guttural growl, “NONE shall PASS! You shall not STAY! Unless the tariffs ye are prepared to PAY!”

 

The captain inquires, “How much are these tariffs, oh mighty wizard?”

 

The wizard leans in, a spark of dark fire in his eyes and he mutters, “I will need to check. Here, hold this.”

 

The wizard hands this staff over to the captain as he withdraws a cell phone from within the folds of his billowing robes and places it next to this ear.

 

“Yes, Mr. President. We have a boat from China….yes, China. And they want to know….yes, your election was most impressive. Best ever. Yes…. Anyway, the captain has…. Yes, Mr. President, it was horrible. Such a witch hunt, yes. So the boat is carrying many things… yes, the wall. Oh, absolutely, the wall, Mr. President. Must build wall, of course. Anyway, the Chinese want to sell some….yes, the Democrats are being mean to you. Your tax returns are your business, yes sir. Anyway….yes, you are the best businessman ever. Everyone knows that sir. So the Chinese are asking about the tariffs so they can…yes, it’s horrible what Hillary gets away with. So about the tariffs, Mr. President?”

 

After some considerable more nodding and bowing, the wizard eventually pulls the phone from his ear and addresses the captain. “The tariffs comes to $5 billion, sir.”

 

The captain nods and hands the staff back to the wizard. “I see.” He reaches into his jacket to retrieve his own cell phone. “I will transfer the funds right away.”

 

Meanwhile, in Washington DC, a computer at the US Treasury makes a bleeping noise followed by a short satisfied “ping”.

 

Like that, the United States of America is $5 billion richer.

 

And that is how tariffs work.


If you're thinking like Donald Trump.


Is that how tariffs work? No, not really.