The common dictionary defines “tariff” as a list of duties imposed by a government on imported or exported goods; a schedule of prices or fees.” The American Heritage College Dictionary, 3^rd Ed. (Boston: Houghton Mifflin, 1993), p. 1387. The Black’s Law Dictionary, 4^th Ed. Rev. (St. Paul: West Publishing, 1968), p. 1628, defines the term as a book of rates for customs duties to be paid on certain merchandise. In the vernacular, we often associate tariffs with imports and not as much with exports.

The reason for highlighting “list of duties” and “book of rates” is because I want to point to the word-origin of the term tariff. The term tariff derives from the Arabic ta’rif, meaning “explanation; notice,” from ‘arafa (to know). New World Dictionary of the American Language, 2nd College Ed. (Cleveland: William Collins, 1976), p. 1455. The word entered the other European languages by way of the Italian tariffa. In formal Persian, the term is ta’refeh and as any present-day Farsi speaker would attest one complains not about paying ta’refeh but of gomrok dadan, which signifies “giving customs dues.” That there should be a disclosed/posted schedule or a book of rates was for reasons of advance notice and thus predictability of cost to import.   

The term gomrok in Farsi comes from the Turkish gümrük, which refers to “customhouse” and it derives from Byzantine Greek kommérkion, from Latin commercium (i.e., commerce, trade). Redhouse’s Turkish Dictionary (London, 1880), p. 85 (English to Turkish) and pp. 732-733 (Turkish to English); https://en.wiktionary.org/wiki/gümrük . Interestingly, the term gomrok is the root of the toponym Gombroon (Gombrun), the old name for the present-day port of Bandar Abbas, the gateway for the erstwhile Persian trade on the Persian Gulf. Lorimer’s Gazetter of the Persian Gulf  - Geographical and Statistical Calcutta, 1908), p. 8, fn.  

There has been much talk lately on the part of the Republican candidate Donald Trump to impose wide-ranging tariffs on imports. The Democrat candidate Kamala Harris has likened this proposal to a national sales tax; some have likened it to a consumption tax. To be clear, in the United States, a tariff is neither a sales tax nor a consumption tax. A sales or consumption tax is usually enacted by the legislative organ and it applies universally. A tariff, on the other hand, which can be imposed without legislative enactment, often targets an article of trade, or a country of origin, or an exporter in a foreign country, or an importer/business/industry in the United States.

Surely, when an importer is asked to fork over to Uncle Sam a percentage of the value of the imported article, or a specific fee, it is the IMPORTER who, as the condition of release of the goods from customs, pays the tariff and NOT the foreign exporter or country. The importer then has a binary choice: (a) to include the amount of the paid tariff to the price of the goods and thus pass the tariff on to the consumer; or (b) to eat the tariff without passing it onto the consumer, which means that much less money in the hands of the business which, in turn, can affect adversely the operation of the U.S. In the first option above, the price of a T-shirt at Target will go up for the consumer, in which case the consumer will look for a cheaper substitute or forgo the purchase.

Governments often have used tariffs on imports as a way to boost the local industry, hoping that the making of the price of the imports expensive would lead local businesses to enter into domestic manufacturing and production (import substitution policy). Tariffs also can be used to protect an existing domestic business from imports that usually are cheaper or better quality. A tariff on foreign imports also can be used to “punish” a foreign exporter or exporting country by denying it the volume and/or revenue in sales that it could have but for the increased price of its goods due to the tariff.

It is not clear what Trump intends to accomplish by imposing greater tariffs on imports. By all indication, his tariff talk is not designed to achieve a legitimate constructive and positive economic objective. He seems to think that by imposing tariffs he will make more money for the United States, in the same vain that he thought he could build a wall on the southern border and have Mexico pay for it – maybe by putting tariffs on Mexican goods, which then the American consumer had to swallow (not to mention of the legality of such a move under NAFTA, now USMCA). 

Trump has played the tariff card once before, when he imposed tariffs on China, prompting China to decrease its purchase of U.S. soy and other agricultural products. When the farmers started to complain he provided massive subsidies to the farmers to make them whole for the damage that his tariff policy caused them. Who paid for those subsidies? The American taxpayer, of course!

I do not know what kind of a student Trump was at Fordham and later at Wharton School of Business. From what I can see and hear from the horse’s mouth, he has retained none of the social justice values that a first-class Jesuit education at Fordham could have imparted to him, and obviously learned (or retained) even less of what a basic trade course would have taught him at Wharton!