Moron Trade And Tariffs
Sophisticated Economic Sabotage Or Just Plain Stupid?
In these last few days before the bills become due for tariffed products, I’ve begun to wonder if this trade war is really as stupid as it looks or is it a ploy that will destroy thousands of small businesses.
I watch a lot of YouTube stuff and I came across a channel called Fstoppers.
From the channel’s description:
“Fstoppers is a community of photographers and videographers aimed at helping you grow your photography business, make informed decisions when buying photography gear, understanding the latest editing software and lighting tools, and ultimately helping you get back to enjoying photography!”
One of the founders of the Fstoppers site, Lee Morris, did a video titled “Why Trump’s Tariffs Haven’t Affected Us… YET”, talking about how America hasn’t really felt tariffs yet because the first cargo ships affected by the tariffs are just now arriving at US ports. That I know and understand.
Morris talks about a side business he has making and selling hot sauce. The hot sauce is made in the USA, but the bottles and stoppers that contain it are made in China. The video shows Morris talking with his import broker and the obvious confusion about what amount the traffic on his bottles and stoppers would actually be. For some reason, Morris wound up paying a 45% tariff on his bottles and stoppers.
Aside from this video showing the confusion over the tariffs, it was some other points that Morris makes that got my attention.
I would suggest watching the entire 9:10 long video to get the full perspective, but that part that interested me most starts at about the 6:10 mark.
Toward the end of the video, Morris makes several points about small businesses that import all or some of their products or parts for their products, not just from China (145% tariff) but other nations that are under the blanket 10% tariffs.
Morris points out, almost parenthetically, that some products and nations already have tariffs imposed on them and these new tariffs we ON TOP of those existing tariffs.
He also pointed out that many businesses are operating on razor thin profit margins. Even the 10% tariff is too much for those businesses to bear. He also pointed out that some of these businesses are carrying a great deal of debt any interruptions in business could cause defaults.
Ultra Large Container Vessel Mærsk Mc-Kinney Møller passing Port Said in the Suez Canal
While Morris did not point this out, it’s worth mentioning that many businesses sell through Amazon, which takes a huge slice of each sale made by small businesses on that site.
Morris said it appears that many businesses are simply suspending purchases, hoping the tariffs will come off in the near future.
If the tariffs don’t end, the future don’t look good for these small sellers. The claim that somehow America will become rich from the tRUmp tariffs is patently absurd.
But there is one aspect of American business that will actually benefit from the tariffs (and the likely recession to follow): Big business.
Large businesses will be able withstand the tariffs because they are better able to pass costs on to customers (you and me) and have greater access to capital and are better able to service their debt.
The likely future for these small businesses in this tariff scenarios is they will fold. Big business will swoop in like vultures and scoop up their customers, any competition will disappear and big business will be even less restrained in terms of pricing.
So, was this one of the intended consequences of what, on the surface, appears to be a poorly thought out and executed trade war with the rest of the world? I hate to advance a conspiracy theory, but it appears tariffs will kill many small businesses and cripple many more.
On one hand, tariffs could be sophisticated economic sabotage and on the other the trade war could be just plain stupid. Perhaps it is both and the obvious stupidity is a kind of camouflage. Whether this is on purpose or not, big business will benefit from the tariffs and the confusion and uncertainty they have created.