We’ve talked a lot about tariffs lately, and there are a lot of changes happening every day. We can’t possibly keep up with all of them here, but we can provide some much-needed context for the bigger picture of why this is all happening so that as you see new reports each day you can help fit them into a broader understanding. So, here we go!
Here are Five Fast Facts on the tariff war and why we need to win it:
- 🕺 Let’s Go Dancing - Imagine countries are like clubs. If one country wants to send its stuff (like bananas, cars, or bedazzled Crocs) into another country, it might have to pay a fee called a “tariff” — like a cover charge just to get inside. Governments slap tariffs on stuff made in other countries to make it more expensive so people buy local instead.
- 🤯 Ride The Teeter Not-ter - The reality is that a LOT of other countries have been slapping tariffs on American goods for decades. In fact, there are at least 60 countries who have been charging anywhere from 11%-84% on American goods to come in (and some that won’t allow them at all)! This situation where they don’t buy our stuff but we keep buying theirs is called a trade imbalance. It’s like using an international vending machine where everyone gets their snacks tax free…except us.
- 📺 The Quiet Part Out Loud - Using leverage in a deal is like holding the TV remote when everyone wants to watch different channels. You don’t need to yell…you just need to slowly move your thumb toward the “off” button while everyone is watching. Since America has the biggest checkbook in the world, no one really wants us to turn the TV off! Trump’s plan of using tariffs to level the playing field is working – dozens of nations have *ahem* agreed that they do, in fact, love the channel we suggested.
- 🤔 Making The Sausage - The reality is that the situation we’re in isn’t pretty, nor is it simple. There are smart people on both sides of the tariff debate. For example, some in Michigan say that tariffs have already done huge damage to the state’s economy…and there are others saying those same tariffs will bring back tons of jobs that have been lost over the years. Who’s right? Great question! Unfortunately, only time will tell, and the problem is the potential damage done to normal folks along the way. So let’s hope it wraps up soon, yeah?
- 😱 Pick Your War - Tariffs are usually used to get a desired political outcome through economic means. The hard truth is that this is all about China, who is aggressively making a play for the gold medal in the global economic Olympics by taking America out of the game. And China has said they’re prepared to wage “any type” of war to win. That’s not ominous or anything, right? Tariffs are risky and will cause some pain along the way…but they’re a whole lot less pain than an actual war where things explode and people die.
🔥Bottom line: You may be thinking, “why does it really matter, anyway?” Another great question! Because China is effectively a dictatorship with over a billion people to use however it wants, and it lies about everything, steals other nations’ stuff – especially technology – and illegally manipulates global markets to its own advantage. It steals as much as $600 billion from America alone every year, not to mention every other nation it trades with. Wouldn’t it be great if all that stolen value could be handed back to Americans in the form of tax relief or lower prices on bananas, cars, and bedazzled Crocs?
Seriously, though, no one wins in a prolonged trade war. We need China just like they need us (though they need us more, fortunately). But we need to do business on equal footing, with fair terms for both sides. That’s where the current tariffs are trying to take us. And we’d better win, because the alternative is China driving the world’s economy, and that’s not going to be good for America or anyone else.
What do you think about tariffs and the trade war now?
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