Other libertarians in Congress such as Rand Paul and Thomas Massie have decided to take a cautious approach regarding President-Elect Trump. They’re holding out hope that some positive agenda items might actually be accomplished if they play their cards right. Justin Amash isn’t going with that strategy. He’s been on Twitter on a daily basis defending liberty when it comes under attack by Trump. After making the corporate-welfare deal with Carrier, Donald Trump started tweeting about how he would punish other companies that might leave the U.S. with massive tariffs on their goods. Justin Amash totally schooled the economically illiterate President-Elect on tariffs and what they actually mean for consumers.
— Justin Amash (@justinamash) December 4, 2016
The heart of the problem here is that Donald Trump just doesn’t understand what a tariff is. To put it simply, tariffs are taxes. They’re costs imposed on a company for selling their product in a country. If Carrier were to manufacture goods in Mexico, and sell them in the United States, Trump is threatening a 35% tariff on those goods. Although, he doesn’t understand what that actually means for consumers.
Trump thinks that cost is going to be paid for by the company. It won’t be. Companies don’t pay those taxes, they pass them on to the consumer. If Carrier were selling air-conditioners for $100, and Trump imposed a 35% tariff, Carrier wouldn’t continue to sell the unit for $100 and pay the government $35 out of their pocket. They would simply raise the price of the unit to $135. As always, the customer ends up bearing the entire burden and paying 100% of the tariff. These are fairly massive price increases and they’ll hurt the poor the most.
Justin Amash was able to get the concept of tariffs across in just a hundred characters and even fit in an extra jab about Venezuela. The communist country in South America has engaged in many of the protectionist policies that Donald Trump is proposing now. It hasn’t worked out very well for them, and it won’t work for the U.S. either. Our country wisely weened itself off tariffs during the early 20th century and it’s done wonders for our economy and consumers nationwide. Quality continues to go up and prices continue to fall every year. Interfering with that by imposing new tariffs would be counterproductive.