Amazon’s Tariff ‘Mumbo Jumbo’

“Tariff” could be the “most beautiful word in the dictionary,” per President Trump, but in the thesaurus it’s just another word for a tax. As today’s contretemps between the White House and Amazon reminds, a tax that is ultimately borne by consumers. So while Mr. Trump scored a win when the online retailer dropped a plan to show its customers the cost added by tariffs, it underscores a hazard for Mr. Trump that will reemerge as the levies start to bite.A White House official told CNN that the president was “pissed” to learn that Amazon was contemplating a line item on customers’ bills showing how much tariffs had added to the price. Since Mr. Trump has imposed 145 percent tariffs on Communist China, and at least 10 percent on all other nations, the cost will not prove inconsiderable. “Why should a multibillion dollar company pass off costs to consumers?” the unnamed official told CNN.Mr. Trump reportedly called Amazon founder Jeff Bezos to gripe about the move, which the White House press secretary, Karoline Leavitt, characterized as a “hostile and political act.” The online behemoth soon walked back the claims, saying the proposed tariff listing would only have been considered on its bargain site, Haul, not the main Amazon.com platform, and that the notion “was never approved and is not going to happen.”That didn’t prevent the proposed tariff listing from sparking political debate. Senator Schumer hailed Amazon’s initial idea, urging companies to “show your customers how much tariffs are hurting in their pocketbooks.” Amazon’s retreat, for now, puts that suggestion to the side. Yet it leaves unanswered some important questions about how Mr. Trump’s wave of tariffs is going to affect consumers and the economy more broadly. Most significantly, the White House hasn’t been entirely clear as to whether it wants tariffs to go into effect at all, or whether the threat of levies is meant to serve as a negotiating tactic that will lead to lower trade barriers across the board. That is prompting uncertainty for American businesses, making it hard to make long-range plans, and that itself could wreak havoc on the domestic economy regardless of what level of tariffs end up being imposed.Then, too, who is meant to pay for the tariffs? The White House’s remarks this morning suggest that American firms are expected to absorb the price of the levies and not pass them on to consumers. That, though, could dent corporate profits and shareholder returns — hardly a plus for the economy. Firms like Amazon, Walmart, and Target, though, are trying to hold down prices by “pressuring their suppliers to absorb cost increases,” the Wall Street Journal reports.Today’s Amazon altercation, Ms. Leavitt says, is a reminder of “why Americans should buy American,” considering that domestically produced goods would be exempt from the levies. She stressed the administration’s attempts at “onshoring critical supply chains here at home,” to “boost our own manufacturing here.” Yet those efforts, even if well intentioned, could take years to achieve, while Mr. Trump’s tariffs are slated to go into effect in a matter of weeks.The predicament calls to mind the words of the 19th century social scientist William Graham Sumner, who warned against the welfare state, and its attendant confiscatory taxation, in his essay “The Forgotten Man.” He marveled how some averred that “a tariff is not a tax,” as protectionists, he warned, viewed the levies as “a Power, a Force, a sort of Mumbo Jumbo whose special function it is to produce national prosperity.” Yet “if a tariff is not a tax, what is it?”

Amazon’s Tariff ‘Mumbo Jumbo’

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