The McKinley Years
jasonsteinhauer.substack.com
The McKinley Years
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Re: The McKinley Years
#2For anyone interested in a narrative version of this, dan carlin's hardcore history goes deep on the McKinley years
https://www.dancarlin.com/product/hardcore-history-49-the-am...
Re: The McKinley Years
#3[deleted]
Re: The McKinley Years
#4> "This worldview led McKinley, first, to tariffs.
> "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government."
> Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign products would also protect American businesses
I don't know how it worked in the late 19th century, but today the tariff is always paid by the importer. If a US-based manufacturer needs tariffed sheet steel, and has it imported, that manufacturer -- not the foreign steel mill -- owes the tariff to US Customs when the import is processed at the port or border.
Today, a tariff is quite literally the same thing as taxing Americans, though it could be said that it might shift patterns of consumption and incentivize domestic production. (Which, however, takes time to spin up -- and there are better ways to do that, on display throughout Asia: Subsidies and government investment.)
Re: The McKinley Years
#5> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…
I think it may work in the long term but it requires a lot of domestic investment to create that manufacturing capacity. This would require investor confidence that the tariffs will stay around for a long time.
In the short term it will just be basically a sales tax. And I bet corporations will add a few more percent to the price increase caused by tariffs. Same as in the last years with high inflation.
Re: The McKinley Years
#6> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…
I think you're correct about the importer paying the tariff, but it doesn't really matter, does it? If I sell into the US and have to pay the tariff, I'm going to raise my prices to cover the additional expense. Regardless of who pays, the importer's final cost is higher, who then passes it onto the consumer.
Re: The McKinley Years
#7> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…
I think you're correct about the importer paying the tariff, but it doesn't really matter, does it? If I sell into the US and have to pay the tariff, I'm going to raise my prices to cover the additional expense. Regardless of who pays, the importer's final cost is higher, who then passes it onto the consumer.
A lot of imports are basic components; low-level industrial inputs. So there are lots of products which are genuinely made in America -- with, e.g., Chinese aluminum or Canadian steel -- yet will nevertheless probably go up in price.
It almost becomes an across-the-board thing. Practically every American-made product that contains aluminum is going to go up in price, for instance, as there's not nearly enough US aluminum production to satisfy demand. (And, even if there were, US aluminum tends to be considerably more expensive than foreign aluminum, even with the 25% tariff applied...)
Re: The McKinley Years
#8> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…
I think you're correct about the importer paying the tariff, but it doesn't really matter, does it? If I sell into the US and have to pay the tariff, I'm going to raise my prices to cover the additional expense. Regardless of who pays, the importer's final cost is higher, who then passes it onto the consumer.
Yes ultimately it will. People don't have a good intuition for this, but when you buy a good you are paying for the entire supply chain of that good. All the way up to the batteries that go into the miner's headlamp as he pulls raw ore out of the earth.
Re: The McKinley Years
#9> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…
> on display throughout Asia: Subsidies and government investment.
Also on display throughout the United States during the Biden administration.
Re: The McKinley Years
#10> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…
I think it may work in the long term but it requires a lot of domestic investment to create that manufacturing capacity. This would require investor confidence that the tariffs will stay around for a long time. In the short term it will just be basically a sales tax. And I bet corporations will add a few more percent to the price increase caused by tariffs. Same as in the last years with high inflation.
Don't forget a key component of Trump's tariff policy is to "replace" income tax with the tariff (tax). This effectively replaces income tax with sales tax. And you can guess which economic class benefits from this the most.