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Tariffs Are Sales Taxes for Dummies

Written by Gary North on November 20, 2013

Probably the most successful conceptual error that is promoted by defenders of tariffs is this one: “Tariffs are good for the nation.”

Tariffs, being sales taxes, are good for the national government, but they are not good for the nation. At best, they are less bad for the nation than a graduated income tax. But since both are collected, tariffs are not a benefit for the nation.

If sales tax defenders came out and said the following, people probably would not believe them: “An extra sales tax is good for the nation.” Certainly, people who regard themselves as Tea Party members do not want to see an increase of taxes. They do not see taxes as a benefit to the nation.

The people who believe that tariffs are good for the nation are literally incapable of deductive economic reasoning. This argument has been used by mercantilists ever since the late 17th century. Adam Smith’s Wealth of Nations is a refutation of the mercantilist position. Nevertheless, people who are incapable of following a line of economic argumentation, and who get patriotic when they hear the word “nation,” rush to promote tariffs. Thus, the combination of an ignorant patriotism and an ignorant economic analysis produces the statement: “Protectionism is good for the nation.”


Tariffs are good for domestic manufacturers who are not capable of competing with foreign manufacturers. They deeply resent competition of all kinds. But they find it difficult to get the Congress to tax their domestic competitors. So they get what they can: a sales tax on imported goods.

(For the rest of the article on suicidal conservatives, click the link.)

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7 thoughts on “Tariffs Are Sales Taxes for Dummies

  1. Any tax permitting coercive intrusion by government on private affairs of private persons is worse, by far, than any tax which anonymously taxes transactions. Political cost has greater weight than economic cost. No matter what, government will have it's pound of flesh to hand out to favored cronies. Giving government the "power to destroy" persons (rather than things) is a profoundly dangerous error.

  2. Phillip the Bruce says:

    Tariffs do also benefit the employees of the non-competitive domestic companies. As Dr. North points out, these are not many, compared with the number of consumers affected. But often they are union members and can convince members of other unions to support them. Another demonstration of the fact that unions can only obtain higher wages for their members by restricting membership. I support freedom of contract.

  3. power trumps price says:

    gary north would fore go buying from his sons lemonade stand to cross the street and buy some cheaper from the chinese boy's lemonade stand, because North is nothing more then a souless economic animal. Family (race) does not matter to gary north, he will gladly buy cheaper chinese goods and send his son over to apply for a job as janitor for the ever growing sino-lemonade conglomerate. This is not how family or racial/national dynasties are built, just ask the jews which lemonade stand they buy from…… even though lil shlomo is charging a higher price.

  4. In a Libertarian's world, children cannot expect anything from their parents. Hence in theory a Libertarian could disown his child while adopting another child he feel is harder-working and more efficient.

  5. Phillip the Bruce says:

    Whether or not GN would cross the street depends on several factors – how much the price difference is, and how much he values the time and effort to cross the street. If he thought his son's lemonade was overpriced monetarily, but the Chinese boy's lemonade was also too expensive in total cost, he might choose to forego lemonade altogether. This is how the free market works. And it does work. ALL government interference makes it work less efficiently, to the benefit of a select few.
    BTW, according to Genesis 1-11, there is only one race, the human race.

  6. diversity is death says:

    #1…genesis is a jewish book of fiction, and a rather poor one at that.
    #2… humanity is a species, not a race, and some scientists believe some of the races are even different species–yeah, mulattoes are not interracial, but inter-species hybrids, ha!
    #3…free markets are good and work WITHIN THE CONFINES OF A NATION! – let your children compete amongst one another, yes,, but destroy all that is good and holy when you invite alien invaders to jostle for a piece of the action. a house united in pursuit of excellence, or a house divided, alienated by non kin in and consumed with cut throat anti-human individualism.

  7. Tariffs were the main source of revenue for the Federal government for many years until the direct income tax was passed. I agree that free markets; i.e. free men and women trading freely among each other within the confines of law based upon common sense within the confines of our nation, is the best system yet devised.