A primer on the China tariffs

What do you need to know as a consumer about about the China trade tariffs that starts today? This is a short bullet point summary.

Legal background

Tariffs are taxes authorized under Title 19 of U.S Code in 1930. The tax is based on Constitutional authority “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises”. Critics argue that Congress has relegated its Constitutional duties to a mentally deranged President. Tariffs have been used by other countries for centuries, dating back to the earliest recorded tax history. (I recommend the book “Rebellion, Rascals, and Revenue: Tax Follies and Wisdom through the Ages”, by Michael Keen and Joel Slemrod, Princeton Press, for perspective on the history of tariffs).


Tariffs begin September 1 and expand on December 15. The intent of the delay to December 15 was to avoid hurting the Christmas holiday shopping season.

Financial cost to consumers

JP Morgan estimates the average cost is $1,000 per household. However, their estimate is low because it presumes a 10% tariff. The 15% tariff could cost the average household closer to $1,500 per year. It wipes out the consumer savings of the Tax Cuts and Jobs Act and increases the risk of recession. The calculation of cost is complex because the tariff’s effects are not simply increasing the price of products like iPhones.

Trump lacks political support

Trump says “We’re going to win the fight”. Yet few in the U.S. agree with him. Even his own cabinet and Republican Senators are hesitant to make supportive statements on the China tariffs.

Tariffs have backfired on the economy

US experts say China has the upper hand, has been more strategic and has better ability to withstand the tariffs and end reliance on U.S. products. Bloomberg writes “Gary Shapiro, president of the Consumer Technology Association, said the Trump administration’s approach of using tariffs to pressure China into a deal has backfired”.


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