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How About a Progressive Tariff?

I admit to doing a poor job of following the discussion about tariffs on Chinese-made goods. Perhaps that is because the public discussion of this topic degenerates into 'free trade versus protectionism', which seems to belong in the 1800s.

Why are there only two choices? How about sticking tariffs on luxury goods, while leaving 'necessities' alone, that is, tariff-free?

Tariffs on luxury goods would not hurt the consumer of luxury goods -- they are not buying luxury goods for engineering, design, or utilitarian reasons. They are buying luxury goods for ego-gratification. If the tariff makes the toy or status symbol cost 20% more, that should be seen as a good thing. Now the consumer can feel 20% 'better about themselves.'

Since society is finally becoming more aware of economic inequality, a tariff on luxury goods can be seen, effectively, as an income redistribution plan.

Words like 'luxury' or 'necessity'  can be subjective or even judgmental. But is it really that hard to sit down at a spreadsheet and construct a bell-shaped curve of the products in a certain category, and then stick the top 10 or 20 per cent with tariffs?

Consider smart phones. I don't want people buying $75 phones to have to pay more, because of a tariff. But how would it hurt the people buying $800 smartphones if they had to pay 20% more? They would just get 20% more ego-gratification, which is the only point for buying expensive phones in the first place.

If a low-income single mother goes into the Dollar Store to buy a bag of Chinese-made baby socks, do you want her to have to pay more, because of a tariff? But if a yuppie goes into REI to blow $30 for a pair of pink 'all natural' 'Eco-Fluff' socks made by Smart Wool, how would a tariff hurt her?

There is another reason to target luxury goods: those are the goods that are most likely to be 'moved back' to an American factory.

People who know more about economics than me are free to take a shot at my simplistic solution. But I believe that Trump is basically correct if he thinks we have to do something to stop the de-industrializing of America.


Anonymous said…
Makes perfect sense to me. I think of it as equal trade, not free trade. The Chinese or whoever, should be held to The same environmental labor etc. laws that we are. And should not be able to coerce intellectual property etc. from our manufacturers.
Ed said…
I agree with your proposal in principle. However, you selected a poor example; Smart Wool socks are made in the USA. One of the few articles of clothing that I regularly buy that are made in the USA.

President Trumps latest 25% tariff on shoes is going to hurt the poor in this country. The rich will continue to get their expensive shoes from their same suppliers which are not made in China. The same can be said for almost all 'moderately' priced clothing.
Good, yes SmartWool was a bad example. I probably should have chosen an example made by Nike. Of course the phrase "made by" is totally fake in their case. I assume you're just paying for the high cost of living in the Nike headquarters in Portland Oregon.
Ed said…
No, I'm paying for the Keen, Inc. headquarters in Portland, OR.

Keen does manufacture a limited number of shoe models in the USA but the USA model that is closest to what I have been buying is about 50% more expensive than the China import.