The media is lying to you about Trumpís China tariffs
By Brett Arends
Published: May 15, 2019 10:04 a.m. ET

The hysteria must have a political agenda because the amount thatís being charged is peanuts

Are you kidding me?

Iím used to partisan, inaccurate drivel from all sides these days, but the mediaís coverage of President Trumpís tariffs and the so-called ďtrade warĒ takes some kind of cake.

Thereís no serious doubt that some in the media would absolutely love to tank the stock market. They figure that would hurt Trumpís re-election chances in 2020. Mondayís stock market slump, which saw the Dow Jones Industrial Average DJIA, +0.45% tumble 2.4% and the Nasdaq Composite 3.4%, looked just like what the doctor ordered.

I write this, incidentally, as someone who is no fan of the president. But I remember when politics was supposed to stop at the waterís edge.

And, anyway, facts are facts. Most of what the public is being told about these tariffs is either misleading or a downright lie.

Iíve been following the coverage all weekend with my jaw on the floor.

It wasnít long ago the media was complaining because Trump was cutting taxes. Now itís complaining that heís raising them. Confused? Me too.

Uncle Sam benefits
Yes, tariffs are ďcosts.Ē But they do not somehow destroy our money. They do not take our hard-earned dollars and burn them in a big pile. Tariffs are simply federal taxes. Thatís it. The extra costs paid by importers, and consumers, goes to Uncle Sam, to distribute as he sees fit, including, for example, on Obamacare subsidies.

It wasnít long ago the media was complaining because Trump was cutting taxes. Now itís complaining heís raising them. Confused? Me too.

And the amounts involved are trivial. Chicken feed.

President Trump just hiked tariffs from 10% to 25% on about $200 billion in Chinese imports. In other words, he just raised taxes by Ö $30 billion a year.

Oh, no!

The total amount we all paid in taxes last year ó federal, state and local ó was $5.51 trillion. This tax increase that has everyoneís panties in a twist is a rounding error.

Investors panic needlessly
Meanwhile, the total value wiped off U.S. stocks during Mondayís panic was about $700 billion. More than 20 yearsí worth of the new tariffs.

Even if Trump slapped 25% taxes on all Chinese imports, it would come to a tax hike of Ö $135 billion a year. U.S. gross domestic product (GDP) last year: $20.5 trillion.

So even this supposedly scary ďescalationĒ of this ďtariff warĒ would, er, raise our total tax bill from 26.9% of GDP all the way to 27.5% of GDP.

Oh, and isnít it interesting to see some peopleís priorities? Apparently the most shocking part of this trivial tax hike is that it might raise the price of new Apple AAPL, -0.27% iPhones.

Last I checked, these were luxury items, right?

U.S. consumers gain
Meanwhile, the trade spat seems to be bringing down food prices. China is going to take less of our farm products. So wheat prices are down 20% since the start of the year. Soybeans are at 10-year lows.

Good for consumers, right?

No, no, of course not! Silly you. This is also bad news Ö for farmers!

And all this ignores the much bigger picture, anyway.

The tariffs are simply a means to an end. The president is trying to get China to start buying more of our stuff. He knows the so-called Middle Kingdom, which now has the second-biggest economy in the world, responds to incentives more than to nice words. These tariffs give China an incentive to open up.

OK, so Chinaís first reaction is just to retaliate. Big deal. Thatís just posturing.

Right now we export less to China than we do to Japan, South Korea and Singapore put together. Thatís the point. So the effect of Chinaís new tariffs on the U.S. are yet another rounding error. Even if China banned all imports from the U.S., that would amount to only 0.6% of our gross domestic product. And weíd sell the stuff somewhere else.

Donít buy the hysteria. President Trump is simply trying to pressure our biggest competitor to buy more American goods. That should be a good thing, even if you donít like him.
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