Businessman (John) who runs a small manufacturing company receives a phone call from one of his suppliers.
Supplier: "Hey, John, we’ve got your order in, but I’m going to have to send you a replacement invoice."
John: "Why?"
Supplier: "Well, I have to add a 25% surcharge to the order."
John: "What?"
Supplier: "When we went to the port of Los Angeles to pick up our container, we had to pay U.S. Customs the new 25% tariff in order for Customs to release it to us."
John: "But I placed that order in November, before the tariffs came into effect!"
Supplier: "I know. But what matters is that for us to obtain possession of our goods, we had to pay an additional 25% tariff."
John: "But Trump said China would pay the tariff!"
Supplier: "Well, I’m not China, but I damn sure had to pay that tariff before they would release my container. And now I have no choice but to pass it along to my customers."
John: "Now that I think about it, I placed that order even before Trump was elected, not just before the tariffs came into effect."
Supplier: "I know. Doesn’t matter. Had the ship arrived one day earlier, there would have been no tariff. That's how random and crazy things are since Trump took over."
John: "I can’t believe this. My customers aren’t going to accept a price increase."
Supplier: "I understand. Look, if you want to cancel your order, I understand, but you’d still have to pay the tariff charge, since we had to pay that up-front. Consider it a restocking fee."
John: "I can’t make my product and fill MY orders without those materials."
Supplier: "I know. It sucks."
John: "I'm not the bad guy. My rubber duckies bring happiness and cheer to children all over the country. Why am I being punished?"
Supplier: "National security."
John: "You know, I’ve got the TV on right now, and Trump literally just said that China and Canada and Mexico pay the tariffs . . . "
Supplier: "His press secretary just said the same thing in the White House briefing room. Maybe I should ask the White House for a reimbursement for that tariff check I just wrote."
John: (Whimpers softly into the phone) "Even then I'd still be paying for it as a taxpayer."
Supplier: "Actually, you’re lucky you got what you did. With these daily threats of new and higher tariffs, I’m terrified (tariffied?) to even place new orders, because I have no idea what price I’m actually going to have to pay when the next container arrives. I had to lay off ten employees Monday because I literally can’t project accurately my sales expectations for the next six months. The information changes every time the President goes on TV or posts something on social media. It’s a helluva way to have to conduct business."
John: "I need a drink."
(hours later)
John: "A scotch neat is HOW MUCH?"
Bartender: "You know there are tariffs on imported liquor, don’t you?"
John: "When will this nightmare end?"
Bartender: "You know the worst thing? The president isn’t even given the power to levy tariffs in the Constitution. That power belongs to Congress, not the president."
John: "Then I’m going to call my congressman."
Bartender: "Won’t matter. They surrendered long ago."
John: "You seem to know a lot about politics for a bartender."
Bartender: "I used to work for a manufacturer but I got laid off because of the tariffs."
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Supplier: "Hey, John, we’ve got your order in, but I’m going to have to send you a replacement invoice."
John: "Why?"
Supplier: "Well, I have to add a 25% surcharge to the order."
John: "What?"
Supplier: "When we went to the port of Los Angeles to pick up our container, we had to pay U.S. Customs the new 25% tariff in order for Customs to release it to us."
John: "But I placed that order in November, before the tariffs came into effect!"
Supplier: "I know. But what matters is that for us to obtain possession of our goods, we had to pay an additional 25% tariff."
John: "But Trump said China would pay the tariff!"
Supplier: "Well, I’m not China, but I damn sure had to pay that tariff before they would release my container. And now I have no choice but to pass it along to my customers."
John: "Now that I think about it, I placed that order even before Trump was elected, not just before the tariffs came into effect."
Supplier: "I know. Doesn’t matter. Had the ship arrived one day earlier, there would have been no tariff. That's how random and crazy things are since Trump took over."
John: "I can’t believe this. My customers aren’t going to accept a price increase."
Supplier: "I understand. Look, if you want to cancel your order, I understand, but you’d still have to pay the tariff charge, since we had to pay that up-front. Consider it a restocking fee."
John: "I can’t make my product and fill MY orders without those materials."
Supplier: "I know. It sucks."
John: "I'm not the bad guy. My rubber duckies bring happiness and cheer to children all over the country. Why am I being punished?"
Supplier: "National security."
John: "You know, I’ve got the TV on right now, and Trump literally just said that China and Canada and Mexico pay the tariffs . . . "
Supplier: "His press secretary just said the same thing in the White House briefing room. Maybe I should ask the White House for a reimbursement for that tariff check I just wrote."
John: (Whimpers softly into the phone) "Even then I'd still be paying for it as a taxpayer."
Supplier: "Actually, you’re lucky you got what you did. With these daily threats of new and higher tariffs, I’m terrified (tariffied?) to even place new orders, because I have no idea what price I’m actually going to have to pay when the next container arrives. I had to lay off ten employees Monday because I literally can’t project accurately my sales expectations for the next six months. The information changes every time the President goes on TV or posts something on social media. It’s a helluva way to have to conduct business."
John: "I need a drink."
(hours later)
John: "A scotch neat is HOW MUCH?"
Bartender: "You know there are tariffs on imported liquor, don’t you?"
John: "When will this nightmare end?"
Bartender: "You know the worst thing? The president isn’t even given the power to levy tariffs in the Constitution. That power belongs to Congress, not the president."
John: "Then I’m going to call my congressman."
Bartender: "Won’t matter. They surrendered long ago."
John: "You seem to know a lot about politics for a bartender."
Bartender: "I used to work for a manufacturer but I got laid off because of the tariffs."
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Today's TaxByte was written by IPI President Tom Giovanetti.