Sanctions And Tariffs, Functionally Different, Purpose The Same

A friend said she’d read one of my stories if I wrote about tariffs. So here it is. There is no story. Or no new story.

Biden opens a hotel. A vendor from China comes to him with a door-lock security system that is better than the one Biden can get locally. The local vendor does a lot of business at the hotel. The local vendor claims China uses State money to produce better locks. The local vendor says if he has more time he will produce the same level lock he just needs to keep the Chinese company from “unfairly” establishing itself — otherwise it will be difficult to get them out.

Biden sanctions China (rather sanctions a specific industry), preventing them from getting the chips they need to produce better locks.

Never mind that history shows that the local vendors never match the improvements of their foreign competitor. Instead, they take the extra money and pay themselves more. In time they go bankrupt and the foreign producer finds a way into the market.

That’s what happened when the U.S. car industry tried to freeze out Japan, then South Korea, and now China (in process).

Trump opens a hotel. A vendor comes to him with the same lock system.

Trump says he wants a lower price. The vendor says he can’t do it. So Trump raises prices on the high end rooms where he installs the locks, but keeps the rest of the locks local.

Sanctions and tariffs are the cut-throat tools of big business. Like war (which they are the economic equivalent) they must be turned into law and enforced by government.

The goals of trade sanctions are the same as tariffs.

What Biden and his supporters did under the guise of “national security”, blocking China from the latest chips from U.S./Japan/South Korea/Taiwan/European consortiums, is the same as Trump’s tariffs under the guise of protecting “us” from criminal and illegal immigrants and fentanyl.

The benefit of sanctions and tariffs is pricing power for local industries.

Would U.S. fighter jets retain their superiority if China had access to the same chips for their military? The argument works if you don’t read history. Or you believe “this time will be different.”

If you develop and manufacture high tech in the “West” you benefit from freezing China out.

Certainly, freezing China out hurts the “consumer” but the consumer has no access to big money and it is too lazy or dumb to find and vote for candidates who will vote their interests.

Further — and this is never mentioned in the media — the consumer is also an employee somewhere. Will employees of company ‘X’ better if sanctions and/or tariffs are pointed against their foreign competitors?

What the tariffs signal is an effort by the American owned businesses — and I don’t mean just oligarchs — to maintain their wealth by increasing the prices they charge. To get wage concessions where they need them. To maintain bonuses for those close to them. It’s super ugly.

I don’t believe they’re conscious they’re doing it. I don’t believe oligarchs are evil in any special way. Most citizens of the United States feel entitled, one way or another. Mix that will politically-juiced arrogance and here we are.

What about Canada and Mexico? I don’t know which specific industries in the U.S. benefit from the tariffs, but I’m certain they exist and have Trump’s loyalty. Let me know in the comments what they are! Or if you think my analysis ludicrous!

Thanks!