Tariff Truths: How Trump’s Trade War Is Taxing Americans and Lowering Quality

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It was about a week, week and a half ago, Secretary Treasury Scott Bessent was, you know, being pushed on tariffs and what they’re doing. And he got upset that they were calling tariffs a tax. I don’t think it’s a tax. Well, when you go, well, he said something. He when you go get a driver’s license and you pay a fee, is that a tax? Yeah, Scott, it is a tax. Yeah, absolutely. It’s a tax. may call it something else.

But it’s a tax. Anyway, some of the latest stories here. Tariff costs to companies this year to hit 1.2 trillion with consumers taking most of the hit. That’s us. It’s not a tax. Scott. Scott, what would you call it, buddy? Huh? What would you call it?

I mean, you’re making us bend over, grab the ankles, you’re smacking us in the ass like, you know, Kevin Bacon was getting smacked in Animal House. Thank you, sir. May I have another? And you’re trying to call it something else?

Yeah, Trump’s tariffs are going to businesses upward of $1.2 trillion in 2025, most of the cost being passed on to consumers. The estimate of additional expenses for companies is probably conservative. So it could be much more. Another story, small businesses are being crushed by Trump’s tariffs and economists

Say it’s a warning for the economy. You don’t wow, shocker there, okay? CEO of AV Universal, a small footwear company that sells through retailers like Macy’s, Nordstrom, and DSW, said he’d take out a $250,000 loan to pay his tariff bill on a container of shoes he imported from India for the holiday shopping season. He didn’t have the cash on hand to pay the duties, which he said used to be around $7,500.

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for a similar size container. This was before Trump’s new tariffs. But if he didn’t do that, he wouldn’t have anything to sell during the holidays. So he was faced with a choice, take on the line of credit, which came with onerous terms like weekly payments and a 32 % interest rate and raise prices to pay it back or close the business he spent the last nine years building. He decided

take out the loan. I don’t know if I do it. I’m gonna say put myself in this guy’s shoes. You know, sometimes again, this happens with small businesses all the time. People put their their heart and soul into these things. And then they they can have a very difficult time, very difficult time dealing when the the trains different. No one likes dealing with the actual terrain.

I’m sure this individual is probably hoping and praying that the Supreme Court will do the right thing and overturn these tariffs. But then again, Trump will appeal or he’ll come up with something else to try to keep them.

I don’t know. He says, everybody believes that I’m a fighter, so I’m fighting it. We’ve reduced some salaries. We had planned to hire some people. We’re not going to hire anymore. That’s another aspect as well that I’ve talked about regards to the jobs market. Jobs get a very difficult time improving until these tariffs are done away with. And I can go on down the list here, but there’s another thing as well. It was actually a really great piece put together by a

Professor, what is it? Yeah, socioeconomics, Southeastern Louisiana University. This gentleman talked about how tariffs make you pay. And this was a great point. Great point. I don’t know, maybe I brought it up here in the past. I’m not sure. Make you pay more for worse products. Why do higher trade barriers result?

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in lower quality.

I guess, you you want to take a look at this way. Okay. If I’m, you know, like I said, I, if I wanted to cut my own hair. Okay. Remember that thing they used to sell the flow B. Okay. If I wanted to cut my own hair, not going to look too good. Right. Quality oftentimes can suffer when we substitute self-reliance.

and hubris for a genuine expertise of other people. I’ve learned this the hard way on few occasions. If I don’t know, people are, well, you know, we’ve got all these YouTube videos and all this stuff. I’m like, nah, I’ll gladly pay somebody to do this. I’m sure I can figure it out, but you know what, is it really worth it?

In everyday life, we embrace the reality that different people have different talents and abilities.

You know what, we’ll use this example. I think this is a good one. Okay. We just watched Shohei Otani, who is a Japanese citizen, do something that no one has ever done before. My jaw dropped when I woke up the next morning and I saw the headline, 10 strikeouts and three home runs.

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I, wow. Wow. know, jeez, know, correct me if I’m wrong. mean, do we really need, mean, Otani here, I mean, we can find an American to play the field too, right?

No, he’s kind of irreplaceable based upon what he does. Why would we do away with that? You can take a look at the same thing when it comes to music as well.

But having access, and again, is cold, true, kind of tariffs are also immigration as well. Access to world-class talent and ability is a good thing, not a bad thing. Free traders apply this basically to all aspects of foreign trade.

certain countries have certain strengths and abilities. It’s a reality. Some of these things happen to be…

You want to say basically built into their system. They might have the right climate, for example. Right climate, you you take a look at, know, know, Tuscany when it comes to wine areas in France. Yeah, we’ve got Napa as well. You might want to think about having the right climate and soil for coffee. You look to someplace like Columbia, whatever it may be. Other things, it just so happens to be part of

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a society’s culture, where again, they just might have those types of craftsmen acquired skills that we just don’t have generations of experience. They make the point you want to think about like Swiss watchmaking or Scotch whiskey making.

German engineering with certain items. Italians when it comes to you know leather work and shoes and clothing. Various different factors determine which nations actually excel at producing. These types of talents you can’t snap your fingers and all of a sudden acquire them. Natural resources of course.

cannot work that way. Again, this is one of the reasons why protectionism is a way we’re going to erode quality here in the United States. This is a great argument they make. Suppose President Trump imposes steep tariffs on Colombian coffee. Even if American farmers could ramp up coffee production by 10,000%, they’d never be able to replicate Colombia’s perfect blend of coffee-making ingredients. It’s subtropical.

climate, volcanic soil, steady rainfall, and high altitude mountains. In the end, we wouldn’t merely pay more for coffee, we’d pay more for worse coffee. That same logic could be applied to Mexican avocados, again, Italian suits, Italian and French wines, other imports, countless things that we get here. olive oil, I use one that I began I

My olive oil shipped from Italy, Greece, various different places. Again, it’s great, okay? World class quality, it’s very easy. They make this argument, very easy for all of us to take for granted, but almost impossible to replace. What you have to settle for is mediocrity. The beauty of specialization and trade is that we don’t have to be the best at everything.

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to enjoy the world’s best quality products. Free traders ought to deploy this quality argument more forcefully when discussing the perils of protectionism. Quality matters to an economy in ways that price and employment statistics can’t capture. Right? I mean, that makes sense. Protectionism also will rot the will to build. When you are insulated from foreign competition,

Protected industries have less incentive to innovate and improve. Why strive for excellence when you can lobby politicians for protection at a fraction of the cost?

And again, you can look at this right now. You can look at it throughout history, anemic economies. Soviet Union basically sealed itself behind their little iron curtain there, Political and economic shutting down the doors. Again, what was the innovation that they had going on there? That last, Russia still has those problems today. Now, protectionists may argue that the quality

of many domestic goods has improved over time. Okay, good. You’re not getting any argument there. And they make the example of American beer. American beer and all the micro-brewers and the IPAs basically catching up to European beers. But most brew masters would tell you this improvement was spurred by foreign competition, not protectionist pampering.

foreign brewers pushed Americans to raise their game. This highlights another crucial aspect of the quality argument. Trade doesn’t merely give us access to top-notch foreign goods, it ensures the quality of our domestic goods keeps improving.

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Are they wrong? We’ve said this for some time. And I said, I don’t know what’s going to happen there at the supreme.

Let markets, let markets not politicians decide where true excellence lies. It’s just that simple. Let markets decide, not people in Washington DC. Watchdogonwallstreet.com.