Democrat lawyers want to define tariffs as taxes because taxes must be approved by Congress, not Trump.

Taxes are imposed upon persons earning income in the U.S.  Tariffs are import duties imposed upon foreign entities.  They are not taxes.  The courts need to get this right.

If the courts says Congress must approve tariffs, Congress will be unable to comply.  Tariffs change commonly, and there are 194 countries that will pay tariffs to us.  There is no chance that Congress could handle that task, nor should it.  Congress’s duty is to approve a rare change of income tax, which is a single tax, not 194 different income taxes.

Democrats might argue that tariffs cause inflation.  Despite high tariffs, the most recent monthly inflation rate was only 0.2 percent.  That is a 2.4-percent annualized rate, nearly what it was before Biden ran the annualized inflation rate up to 9.6.

This indicates that tariffs have little effect upon inflation.  Pundits on both sides and some economists have been saying they are not sure how much inflation tariffs will cause.  Or they say, “We must wait and see.”

They overlook what can be explained with a simple micro-economic allegory.  Tariffs have little effect on inflation because consumers are not stupid; they are smart shoppers.  Say a woman shops at the “ABC store,” which is all American-made goods, and the “XYZ store,” which supplies Chinese goods.

If XYZ store prices rise 30 percent due to tariffs, how fast will she switch to ABC?  Almost immediately. 

How fast will a corporation react when it loses market share (customers) because Chinese parts drive up the price of their product?  Almost immediately.  It will seek local suppliers or buy local suppliers.

Tariffs will work as surely as a dropped ball falls to the ground.

James T. Moodey is a retired entrepreneur, author, and economic essayist since 1978.  His most recent book, The Ladder Out of Poverty, explains why the poverty rate has not declined since the Great Society promised to end poverty.

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