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(noun) a tax on imported goods
We old trade hands spent years telling people trade policy wasn’t about tariffs any more. Tariffs around the world were low and falling, we said. Trade barriers these days were all about complex technical regulations, we said. And then came the soi-disant “Tariff Man” Donald Trump to return trade policy to a simpler, more brutal era.
When Trump calls “tariff” the most beautiful word in the English language— “it’s more beautiful than love, it’s more beautiful than anything” — he probably isn’t thinking of its romantically serpentine etymology. It has come to us from a term originally used by Arab traders to mean a notification or an inventory, via some combination of Persian, Turkish, Italian and French routes — the bountiful interchange of medieval Mediterranean commerce embodied in a single word.
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But the incoming US president thinks trade is how foreigners in general and China in particular steal from the US and tariffs are how he can stop them. He’s wrongly convinced they’re paid by foreign companies: tariff revenue is actually remitted to tax authorities by importers — and as the duties he imposed in his first term showed, domestic companies and consumers generally end up absorbing the cost.
For Trump, however, they’re a universal solvent, not just a crowbar to close trade deficits but also a source of tax revenue and a tool of geopolitical leverage. They certainly get attention: his threat of 25 per cent tariffs on imports from Canada and Mexico unless they sorted out illegal immigration and the fentanyl trade had their leaders rushing to show they were on the case.
Most economists hate tariffs, thinking them distortive and damaging. Most governments have moved away from using them on a large scale. Trump’s tariff obsession really does involve dusting down a weapon from a bygone era. We’re going to spend four years learning how a blunderbuss performs in a modern trade war.
