The LuLac Edition #5, 259, March 4th, 2025

MAYBE I’M

AMAZED

Our “Maybe I’m Amazed” logo.

TARIFF EDITION

EDITOR’S NOTE: Today was the day tariffs were supposed to go into effect from our government to the two most vital trading partners we have, Mexico and Canada. As Trump takes the stage tonight, here’s an education on what tariffs are and what do they mean.

MAYBE I’M AMAZED……..that tariffs are a way for countries to control international trade. By artificially raising the cost of importing goods, tariffs can incentivize would-be importers to instead purchase goods from domestic sellers, potentially strengthening the local economy.

MAYBE I’M AMAZED…that Tariffs also generate revenue for importing countries, though in developed countries and in today’s global economy, they tend to be used more to achieve foreign policy goals than financial ones.

MAYBE I’M AMAZED….that  In a literal sense, companies that are importing goods from international trade partners pay the tariff fees to CBP at the port of entry within 10 days. When the US raises tariffs, US companies importing goods are responsible for paying those tariffs. But as an economic policy, tariffs have implications beyond the money exchanged at the border.

MAYBE I’M AMAZED…..according to the Bureau of Labor Statistics (BLS), this indirectly raises domestic prices on goods as supply-and-demand forces often push the burden onto consumers in the importing country.  In the case of Canada, their dollar is more expensive than ours so a retaliatory one from them will affect United States buyers who are bigger whiners about prices of goods than our neighbors to the north.

MAYBE I’M AMAZED…….that n a supply-and-demand economy, when supply of a certain commodity goes down, prices tend to go up, because there is less of the commodity available to meet the demand. Tariffs, like all taxes, drive an economic “wedge” between what an importer pays and what an exporter receives as payment.

MAYBE I’M AMAZED…that Tariffs, by design in some cases, lower competition on domestic sellers. If a buyer needs to pay more to import a good, more buyers may buy domestically or from another import partner, which means these sellers can increase prices. Artificially disincentivizing buyers from participating in international markets effectively shortens the global supply.

MAYBE I’M AMAZED…….In 2009, increased tariffs on tires imported from China led to a 67% drop in the volume of Chinese tire imports. As a result, US buyers started purchasing more from domestic sellers and other international sellers, who could sell for higher prices with their Chinese competition burdened by the tariff. The cost was passed on to consumers: The BLS estimated an additional cost of $1.1 billion for domestic consumers as a result of the tariff.

MAYBE I’M AMAZED……that The Constitution designates Congress as the authority over tariffs. Prior to the 1930s, Congress set most tariffs by passing legislation. Since then, it has delegated much of that authority to the president through legislation, authorizing the White House to adjust rates.

MAYBE I’M AMAZED……that the US brought in $77 billion in tariffs in 2024, according to the Congressional Budget Office (CBO). This was down from a historically high period after revenue from tariffs more than doubled from 2017 to 202. However, This total accounted for 1.6% of federal revenue. Since the 1960s, duties have not made up more than 2.0% of total revenue.

MAYBE I’M AMAZED…..that the last time a tariff was talked about so often was when the Smoot Hawley Act was passed in the 20s. It was a law that implemented protectionist trade policies in the United States. Sponsored by Senator Reed Smoot and Representative Willis C. Hawley, it was signed by President Herbert Hoover on June 17, 1930. The act raised US tariffs on over 20,000 imported goods. 

MAYBE I’M AMAZED…….that under the tariffs  act, excluding duty-free imports, were the second highest in United States history, exceeded by only the Tariff of 1828.The act prompted retaliatory tariffs by many other countries. The act and tariffs imposed by America's trading partners in retaliation were major factors of the reduction of American exports and imports by 67% during the Great Depression. Economists and economic historians have agreed that the passage of the Smoot–Hawley Tariff worsened the effects of the Great Depression.

MAYBE I’M AMAZED….that most of the decline in trade was due to a plunge in GDP in the US and worldwide. However, beyond that was additional decline. Some countries protested and others also retaliated with trade restrictions and tariffs. American exports to the protesters fell 18% and exports to those who retaliated fell 31%.] Threats of retaliation by other countries began long before the bill was enacted into law in June 1930. As the House of Representatives passed it in May 1929, boycotts broke out, and foreign governments moved to increase rates against American products.

MAYBE I’M AMAZED….In May 1930, Canada, the country's most loyal trading partner, retaliated by imposing new tariffs on 16 products that accounted altogether for around 30% of US exports to Canada. Canada later also forged closer economic links with the British Empire via the British Empire Economic Conference of 1932, while France and Britain protested and developed new trade partners, and Germany developed a system of trade via clearing.

MAYBE I’M AMAZED ……that the depression worsened for workers and farmers despite Smoot and Hawley's promises of prosperity from high tariffs; consequently, Hawley lost re-nomination, while Smoot was one of 12 Republican Senators who lost their seats in the 1932 elections, with the swing being the largest in Senate history (being equaled in 1958 and 1980). Nations other than Canada that enacted retaliatory tariffs included Cuba, Mexico, France, Italy, Spain, Argentina, Australia, New Zealand, and Switzerland.

MAYBE I’M AMAZED…..that no one seems to think that the same thing won’t happen again. Prices will go way up and the only person to blame would be Trump and his ridiculous idea that this will improve an economy that cratered under Trump during CO VID but was saved by Joe Biden.

MAYBE I’M AMAZED…….that Trump thinks Canada is going to go away. The head of the city of Brampton, Mayor Patrick Brown  said Canada will take its 1.9 billion dollars in goods and look for other trading partners. Brampton is in the Canadian province of Ontario, and the regional seat of the Regional Municipality of Peel. It is part of the Greater Toronto Area (GTA) and is a lower-tier municipality within the Peel Region. The city has a population of 656,480 as of the 2021 Census, making it the ninth most populous municipality in Canada and the third most populous city in the Greater Golden Horseshoe urban area, behind Toronto and Mississauga. The City of Brampton is bordered by Vaughan to the east, Halton Hills to the west, Caledon to the north, Mississauga to the south, and Etobicoke (Toronto) to the southeast. As of today, the total population of Brampton is 791,486. I don’t think that Trump, the dumb shit that he is realizes how BIG Canada is and how many people are pissed at him