There seems to be some confusion amongst high-ranking members of President Trump’s cabinet as to whether tariffs are or are not taxes.
To settle the question, I spoke to one of the few economists whom I really trust. I asked sincerely, “Are tariffs taxes or not?”
He turned red in the face and said, “Jim, I cannot believe you asked that question. You know better. I will give you an exercise that will help you never forget the answer to that question.”
He took me to a blackboard and told me to write three words as many times as I could fit on the blackboard . Those three words were:
Tariffs are taxes.
Taxes get collected in many ways. One of those ways consists of tariffs.
I will never forget.
Nor should you.