Let’s Look At Just One Policy

Particularly for the more highly educated it is easy to dismiss Donald Trump as an idiot, mainly because he both is and acts like one. That is a mistake! He is telling us what he would do if he is allowed to regain power. Today I want to examine just one stance he has taken.

Largely because Bubba bought the malarkey displayed on the intro to The Apprentice – again, I am proud to say I never watched an episode of it! – Trump is widely perceived as a business genius and huge success. Neither is true, in reality he is a fraud, stiff and a failed businessman. Who else do you know of that went bankrupt multiple times in the casino business?

Trump has repeatedly said he would institute a minimum 10% tariffs on all imports. Note the word use of the word “minimum”, but I’ll give him the benefit of the doubt and proceed using that number.

The official inflation rate in the United States as of this writing is 3.48%. I want to use round numbers so I’ll work with 3.5%. The right wing is railing over the high cost of living (a/k/a inflation), since so much of what we consume either in whole or in part is imported let’s just raise that 5 percentage points to account for the Trump tariff (I’m probably underestimating the import levels). With all other factors held constant that takes inflation to 8.5%. Can you imagine the outcry if inflation went to 8.5% between now and November?

But wait there is much, much more.

I’ll only deal with finished goods because I am much more familiar with their supply chain than that of components. Most imported finished goods go through two steps (and often at least one more) before they get to the consumer. I’ll only deal with two: the distributor and the retailer. Let’s say a widget currently costs $10 at the dock. Now we will look at the true impact of the tariff on the consumer.

Both the distributor and the retailer have a percentage (not fixed dollar amount) markup they apply to their total cost of acquisition. That will vary from industry to industry and again I’ll error on the low side at 10% in both cases. In the industry I’m most familiar with they are 18% and 33%.

So, dock to distributor this item becomes $11. Now distributor to retailer it becomes $12.10. Note: I haven’t taken into consideration the effect of taxes which are often a percentage off the top. That is an increase in cost (read: inflation rate) of 21%. Keep in mind that is in addition to our base of 3.5% for a new inflation rate of 24.5%. Remember I’ve been on the low side in my estimates.

Also, this doesn’t take into consideration the effects of retaliation. Do you really think other nations will just accept American bullying? That is how they will perceive it. What about when they raise their imports tariffs on American goods. And rest assured they will! At that point do you expect Trump to admit the error of his ways? That would not be consistent with his never surrender and never admit you were wrong philosophies. Bubba, in his economic and impact ignorance envisions that as being tough.

I have no idea of how to estimate the loss of exports but there will be a significant one and many jobs will disappear in the process. Inflation is bad; unemployment is much worse.

As if nearly 25% inflation wasn’t bad enough, we have no reason to assume it would stop there.

What are you willing to give up in the process? Certain goods will simply become too expensive for most Americans to afford. That is especially true when you consider the components in finished goods only some of which are finally assembled in America. Are you willing to live without gadgets like your iPhone and computer? What about your car when the dealers and repair shops can no longer get parts or the price is prohibitive. What about the machines physicians rely on? They will eventually break and need parts to repair. Those components may not be available.

I’ve only scratched the surface here. These kind of foolish moves by a major world power could bring about a Doomsday scenario. Take Trump both seriously and literally and then vote for Joe Biden and the American way. Biden is the only available viable, informed and intelligent choice.

This article is the property of tellthetruthonthem.com and its content may not be used without citing the source. It may not be reproduced without the permission of Larry Marciniak.