May 2, 2025
“Whatever they tax us, we tax them.” ~ Donald Trump
On April 2—President Trump’s “Liberation Day”—he imposed, then changed, and then delayed, reciprocal tariffs on nearly all U.S. trading partners. Said Trump: “We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years.”
Nothing could be further from the truth.
Foreign firms don’t pay tariffs for the privilege of selling their goods in the U.S. market. The domestic importer files entry documents at the port of entry and pays the estimated customs duties based on the almost 4,000-page Harmonized Tariff Schedule of the United States published by the U.S. International Trade Commission’s Office of Tariff Affairs and Trade Agreements.
American consumers pay tariffs indirectly in the form of higher prices for imported goods, higher prices for domestic goods manufactured with imported raw materials, higher prices for domestic goods (raising the prices of imports opens the door for American companies to raise prices), as well as less consumer choice and fewer exports of finished goods (because of the higher prices of imported raw materials).
The mindset of those who advocate protectionism, national conservatism, economic nationalism, and industrial policy is that if other nations protect their favorite manufactures by imposing tariffs on imported American goods, then the American government ought in retaliation protect its favorite manufactures in the same way.
But a retaliatory tariff merely adds insult to injury. Those who clamor for expanded or higher tariff rates are calling for a tax on themselves.
Why do people think that if country x punishes its citizens by making them pay higher prices and have less consumer choice (when country x imposes tariffs on American goods), then the United States government should do likewise?
So, what can American exporters do about tariffs imposed on their goods when they enter a foreign market?
First of all, they can pressure foreign importers to pressure their governments to lower or eliminate the tariffs.
Second, they can lobby foreign governments to lower or eliminate the tariffs.
Third, they can negotiate with foreign importers and their governments to lower or eliminate the tariffs.
Fourth, they can persuade residents of foreign countries to petition their governments to lower or eliminate the tariffs.
Fifth, they can educate all relevant parties on the benefits of free trade and the harmfulness of tariffs.
There are several things that American exporters should absolutely not do about tariffs imposed on their goods when they enter a foreign market.
They should not pressure, lobby, negotiate, or persuade the U.S. government to institute tariffs or quotas on goods imported into America, enter into a managed trade agreement masquerading as a free trade agreement, calculate a trade deficit, start a trade war, or engage in Soviet-style central planning to determine which industries need to be protected, which countries should be targeted, which items should be subject to tariffs, how much of a tariff should be imposed, what exemptions should be given, what the duration of the tariff should be, and what conditions another country needs to meet to avoid the imposition of tariffs.
In a word, the U.S. government should do nothing. Just like it should do nothing if one company wants to purchase another, a business engages in “price gouging,” a business practices discrimination in hiring, a lender charges a “usurious” interest rate, workers go on strike, a company does not have “equal pay for equal work,” or an employee agrees with an employer to work for less than a “minimum” wage.