Word of the Day: Tariff

Unless you have been living under a rock for the past few months, all you hear about in the different news cycles whether tradtional or digital platforms are tariffs imposed by the United States onto the world. I will not get into the the reasoms why the US are imposing tariffs even to Penguins, that will be the subject for another day. From what I see, many people do not understand what a tariff is. So here we go....

A tariff is a tax that a government places on goods and services imported from other countries.

It’s usually used to make imported products more expensive than local ones, to protect domestic industries, or to generate revenue for the government..There are two main types:

• Specific tariffs: A fixed fee per unit (e.g., $5 per ton of steel).

• Ad valorem tariffs: A percentage of the value of the good (e.g., 10% of the price of imported cars).

I found this little video on what is a tariff and how it works. Check it out....

On the surface it might be a good idea for a government to impose tariffs, however tariffs drive up prices. The consumer ends up paying for any increase driven by tariffs. Many Americans do not seem to comprehend this fact. It has been illustrated numerious times in the past where Tariffs were imposed.

What Will Tariffs do to the World Order?

As much as the current US Government believe that imposing Tariffs and ignoring the signed agreements like with Canada and Mexico will bring prosperity of the United States, not many economists agree with that statement. There are important issues in the United States where the debt and monetary problems are at the root of their initiatives. I agree that there is a problem, but like many things thay are handling, the solutions that are brought forth is worrisome and not sure that they are the proper solution to the problems. It is definitely producing choas and instability.

If you have been following me, you will know that I am a Ray Dalio fan. He has the ability to explain in simplistic terms, chaotic situations in a historical perspective. He recently gave an interview to NBC, giving his perspective on what is happening and where all this is heading. its an interesting listen.

We are currently living through turbulent times. We need to stay calm, positive and hope that our leaders will do what is best for us.

Keep on smiling. Its one of the only things that is still still free in this world.