Thread by @unseen1_unseen

1. Some people are still confused about tariffs and their impacts (thanks fake media).

A tariff is a tax on foreign products.

Fair enough. In other words, Trump raised taxes on foreign products.

2. As with any tax the final rate and rate of Increase determines its impacts on the economy. Maybe it will be easier to understand if we use a tax we all know as an example instead of the mysterious tariff term.

3. Let's say the government goes crazy and decides they want to tax income. I know a crazy stupid idea but what are you going to do.

4. So we start at 0% taxes on income. Life is good. Everyone gets up and goes to work knowing all the fruit of their labor is theirs to enjoy.

5. If the government starts taxing income at 25% are people going to stop working? They still keep 75%. Is the economy going to come to a stop? Depending on how that 25% is spent by the gov it may help society with transportation, law and order, defense etc.

6. Now, what if the gov increases taxes to 60%? The worker only keeps 40%. Many, many, many, more people will stop working. The economy might come to a stop. The gov may have to force people to go to work to keep people fed and the lights on or go to war to gain needed resources

7. If the government wanted to stop something &/or drive it underground like drug dealing, they can tax income at 100%. There is now no reason to go to work. U are working for free. U have no economy. There are more shades to these examples but let's stay out of the weeds here.

8. Okay going back to tariffs substituting tariffs in the above examples.
0%= "free trade"
25%=Trump tariffs
60%=smoot-hawley tarrifs
100%=India's tariff on motorcycles. Closed market.

9. As far as the rate of increase, tariffs are a very, very slow process. They are seen coming for months sometimes years. There is a legal process that must be followed. You just don't wake up one day on Christmas day and have a new tariff like say a new healthcare tax system.

10. Taking both the final tax rate and the slow rate of increase it's easy to see the Trump tariffs will not be a major drag to the economy. They may be strong enough to change behaviors since cheaper options are available and you can avoid the tariff all together.