Thread by @Stonekettle

"The United States Treasury has taken in MANY billions of dollars..."

This is an astoundingly ignorant statement.

Particularly from a man who supposedly has a degree in economics from one of the leading business schools in America.

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https://twitter.com/realDonaldTrump/status/1080839254656405504

First: Many billions.

Trump says "MANY billions."

What does that mean? How much is many? Two billion? Ten? A hundred billion? How much exactly?

I mean, he HAS to know, right?

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Surely somebody in the Treasury Department must be able to provide a precise figure?

Somebody at Customs and Border Protection surely must have an exact number, after all, CBP is responsible for collecting those tariffs and submitting them to the Treasury.

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There must be some paperwork? Receipts? Something. Somebody at the Department of Commerce perhaps? Since this would be a big aspect of their job?

I mean, SOMEBODY has to know.

Somebody has to be able to come up with a dollar figure a bit more precise than just "MANY."

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Look here, let's say it's $5 billion. Sure, $5 billion, what Trump is demand for his wall. $5 billion.

The US federal budget for 2018 was 4.407 TRILLION dollars.

$5 billion would be 0.1% of $4 trillion.

Is that "MANY?"

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Say Trump's tariffs put $100 Billion into our coffers. That's a whopping 2.5% of the federal budget.

For comparison sake, the federal budget DEFICIT in 2018 was $782 billion. 17% of the budget.

Starting to see why he's using undefined values instead of actual numbers?

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"MANY billions" sounds like a lot, but when it comes to the US treasury it's a number so small that it barely even registers.

On the other hand, that MANY billions IS a big damned number when it comes out of YOUR pocket.

And that is exactly where it's coming from.

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See, right here, this bit: "Tariffs we are charging China and other countries that have not treated us fairly."

Trump doesn't seem to understand who's actually paying these "many" billions of dollars into the US Treasury.

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A tariff is a tax on goods imported from foreign countries. In this case, foreign goods imported into the United States.

The foreign country doesn't pay that tax.

THE IMPORTER DOES.

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If you are a US automaker and you buy your steel from China, then you have to pay the duty (the tax, the tariff) on that steel to US Customs and Border Protection at the port of entry when you pick up your shipment.

That is literally what CUSTOMS means.

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The IMPORTER pays the tariff, not the foreign supplier.

US tariffs don't tax Chinese steel companies in China. We're taxing AMERICAN companies who USE Chinese steel in AMERICA.

That is what a tariff is.

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Now, when tariffs are levied on foreign goods, a company that imports foreign products has a limited number of options:

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A. They can stop buying foreign goods and switch to domestic suppliers if such exist.

But, by definition, there either AREN'T domestic suppliers OR those suppliers are much more expensive -- otherwise why buy the foreign products in the first place?

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B. Or they can pay the tariff, which they must if there is no other place to get the materials and products they need.

C. Or they can shut down, go out of business. Or, if they have the capital, move to another country without import tariffs and set up shop there.

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Either way, materials and products cost more. So a company then has two choices: absorb the increased cost themselves, lowering profits, maybe below the level of viability, or more likely they pass that cost on to consumers by raising the price of their product.

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If the cost of their product goes up, US companies become non-competitive with foreign companies that are not subject to the tariffs, who import finished products from home, or materials and parts made there and then shipped to foreign-owned factories on US soil for assembly

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And here's the real kicker: If you increase the price of goods, you likewise increase the amount of sales tax that has to be paid for those items by the American consumer.

That's right. More expensive the product, the higher the sales tax.

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Place a tariff on Chinese steel, an American automaker then has to pay that tariff, increasing the price of finished cars, which is then passed on to the consumer who not only ultimately pays the tariff but ALSO a higher sales tax to state and local governments.

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Economics can be a black art and economists argue about a lot of things, but the ONE thing they all agree on no matter what school of economics they identify with is that tariffs always end up being a tax on your own people.

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This money Trump is bragging about today, this "MANY billions," didn't come from China.

That money came out of YOUR pocket.

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Addendum, footnote to #14: If the government then has to pay US business subsidies to stay in business -- as Trump did with soybean farmers -- then the US Treasury doesn't actually get to keep that "MANY billions" anyway and it costs American taxpayers even MORE.

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