The United States collected more in tariffs in the first 11 months of 2021 than any full year in U.S. history.
That means, as I forecast earlier this year, with only three months of data out, that former President Donald Trump, who gave himself the moniker “Tariff Man” now officially ranks second to President Biden, who has largely left his predecessor’s tariffs in place.
The reason: Imports are up and trade is slightly less balanced.
Tariffs are fees placed on imports from other countries. The oft-stated goal of tariffs is to either reduce trade deficits or to combat what are deemed to be unfair trade practices.
Tariffs, initially the way the United States raised money to pay for its young government, before there was an income tax, are generally frowned upon by economists and the pro-trade community. (I am a member of the second but not the first.)
Economists (and many in the pro-trade community) believe tariffs are actually a hidden tax on consumers, in this case U.S. consumers. The notion is that once the cost to the importer increases, the importer passes that cost along to the retailer, who in turns passes that cost on to the consumer.
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I am less convinced. Because there is another option.
Squeeze the manufacturer. Or squeeze the players in the supply chain.
That might explain why, during the Trump Administration, when he could still rightfully crown himself Tariff Man, there was no significant inflation, to the Federal Reserve’s chagrin, even as tariff collections doubled from the last year of his predecessor, Barack Obama.
And, oh yes, imports increased.
The inflation we are experiencing now — the inflation rate released today was the highest since 1982 — is caused by too much money in the economy and too little to spend it on.
I think the economists call that supply and demand.
The “too much money” came from Trump’s decision to send checks to Americans and U.S. businesses in an effort to prevent the economy from going into a tailspin as it was shut down by the then-nascent coronavirus, a well-intentioned plan which in that sense succeeded.
The problem is, this was at the same time that Americans were not able to spend money on restaurants, concerts, hotels and flights. So they bought stuff. Lots of stuff. Lots of imported stuff. Biden largely kept those policies, as well as Trump’s tariffs, in place.
And we expected a different outcome?
If either Trump or Biden had really cared about the U.S. merchandise trade deficit, which is on track to set a record this year — Trump had three record deficits in four years — either one could have told us to save our money.
They could have suggested we save our money, which economists suggest is the only way to cut trade deficits — to increase the savings rate.
But neither Trump nor Biden (thus far) has suggested we stop buying so much stuff, particularly imported stuff like cell phones, computers, TVs, cars and clothes.
So here we are. Imports are up, inflation is up and tariffs are up, way up.
Through November, the United States has collected a record $77.4 billion in tariffs on imports, according to my analysis of just-released U.S. Census data. The December data will be released in early February.
The previous record, set in 2019, was $74.1 billion, as Trump ramped up tariffs on some $300 billion in imports from China in addition to steel tariffs, washing machine tariffs and solar panel tariffs.
During Obama’s last full year in office, the United States collected $34.41 billion in tariffs, or less than half of the top totals by his two successors.
With one month to go, it’s safe to assume the total for all of 2021 will be about $85 billion, even with all those ships stuck out in the Pacific, off the coast of the ports of Los Angeles and Long Beach.
And former President Trump will no longer rightfully be known as Tariff Man. That crown now belongs to President Biden.