Morning Memo - 2025-02-08

Workflow and Tariffs

To: Roger
From: Jim Berger
Date: February 8, 2025
Subject: Workflow and Tariffs

Roger,

I realize that I missed you yesterday, but I had somewhat of a breakthrough yesterday in the development of my workflow.

I want to share with you some thoughts about Trump's tariff threats. If he uses them as a negotiating tool, it is simply a bad strategy. If he means to use tariffs as only a threat, he must remain prepared to implement them.

A tariff represents a form of taxation on the American consumer (in the end, consumers pay all taxes). This tax, like all others, will cause a shift in consumer buying patterns. What shifts take place will not become apparent until some time after the implementation of the tax. I will suggest one of many scenarios.

The increased cost might cause buyers at the lower end of the income scale to stop buying the taxed product. The producers will reduce production (regardless of the country.) They will lay off employees who will, in turn, reduce purchases of other goods. A daisy chain of changes will occur, causing widespread disruptions.

The implementation of any tax causes disruptions in the allocation of resources. If you believe in government" spending," a tariff might provide the "best" source of revenue but don't misinform consumers/taxpayers that the burden will fall entirely on another country.

I will probably elaborate on this topic in a newsletter, but for now, Roger, think about it.

Later,
Jim