Preserving American Values

The New York Times reported last week that Trump has put together a $12 billion bailout package for the American farmer to offset the losses they’ve suffered because of a cutback in sales due to China’s retaliation to Trump’s tariffs.

Trump said, according to the Times, that this bailout was possible because of money that was coming in from his tariffs—the implication being that the tariffs have been paid for by China and other exporting countries.

However, that is not true.  The tariffs are paid for by the American companies that import the products and often the American consumers of those products through raised prices.

I quote from a post I wrote during the first Trump administration: “Trump is fond of saying, in support of his trade war tariffs, that as a result China is paying billions of dollars directly into the U.S. Treasury.  That is blatantly and categorically false.  Either Trump knows the truth and is lying, or he is just dumb about how tariffs work, which is certainly possible.

“What really happens when tariffs are imposed is that the producing country, here China, does not pay a penny.  The tariffs are instead paid by the company importing the product into the U.S., typically an American company.  It is they who are paying the billions of dollars into the U.S. Treasury.

“And guess what the importing company then does?  They often pass part or all of the cost on to their consumer, whether it is a business or the American public.  

“So at the end of the day, the billions of dollars in tariffs are in fact paid by the American consumer or company, not China.  China is only hurt by the tariffs in so far as the increase in the cost of their products to consumers because of the tariffs causes sales to decline.

“And that, as Edith Ann (the Lily Tomlin character) would say, is the truth.”

So the Trump farmer bailout is NOT being paid for by China or any other country.  It is being paid for by either American businesses or the American consumer, or both. It’s like imposing a Federal sales tax on imported products. As such it is a regressive tax, with the burden falling most on those who cannot afford it.

The American farmer deserves to be made whole from the disastrous effect of Trump’s tariffs. Other than electing him, they had no part in this ill-advised scheme. But there’s something wrong with him saving himself from their retribution by taking the tariff money paid by American businesses and consumers to bail them out.

Trump had the nerve to say, “We love our farmers,” at a White House event announcing the bailout.  Obviously, by going forward with the tariffs despite the almost certain risk of China doing what they did previously (it happened during his 1st term), Trump does not love farmers.