“God created the world. The rest is made in China.” – origin unknown

Maybe the most unusual school assembly I can remember took place when I was 8 or 9 years old.

It was meant to be some type of performance to entertain elementary school kids.

I do not remember the entertainment, but I do remember the performer spent at least the first 10 minutes – what felt like 30 minutes as a kid – explaining how the proposed North American Free Trade Agreement, NAFTA for short, was bad for American farmers and how we should go home and tell our parents not to support it.

I had no idea what in the Sam Hill NAFTA was and was baffled why this man was wasting precious entertainment time with a lecture on economics. I assume the lecture was not part of what the school agreed to for the performance, but I guess it was my introduction to the topic of tariffs.

I rarely thought about tariffs since that day until Donald Trump brought them back into the national conversation in a major way during his first presidential term. So what are tariffs?

According to the U.S. government’s International Trade Administration, a tariff – sometimes called a duty – is a tax levied by governments based on the value of imported products. Investopedia.org also points out a specified tariff can be “levied as a fixed fee based on the type of item, such as a $500 tariff on a car.”

Tariffs are collected when the freight from a foreign country arrives in the country of destination and clears the customs process where the transporter of the freight declares what has been brought into the destination country.

After the U.S. Constitution was ratified in 1789, tariffs became a primary source of funding for the national government. Before ratification of the Constitution, tariffs could even be imposed by the states themselves – not only on foreign goods coming into the states but also on goods coming in from other states.

This situation introduced what might be considered the main problem with tariffs: retaliation. If one state raised its tariff rate on out-of-state products, surrounding states would feel miffed and, in turn, raise their rates. Sometimes the results were an ever-escalating game of economic chicken commonly known as a trade war.

Trade wars among countries still take place today whenever one decides to raise its tariff levels.

Of course, the victim when trade wars break out – at least in the short term – are the consumers. Businesses have to make a profit, so they pass along the higher costs associated with importing products on to the people who buy the products. The same is true for products manufactured in the U.S. but requiring raw materials that come from other countries.

President Trump appears to believe tariffs can be used as an advantage when negotiating economic and political agreements with other countries.

The idea is the economic pain felt by other countries due to the higher costs of importing and exporting with the world’s foremost economic superpower will be greater than the pain felt by Americans having to pay more to do business with those countries. This should allow the U.S. to have an advantage in negotiations under this line of thinking.

A possible long-term benefit of higher tariffs is U.S. companies may decide to invest in manufacturing some of the products we currently import from the international market. Ideally, this would create more domestic manufacturing jobs.

While the founding fathers used tariffs as a source of revenue for the federal government, many of them also believed higher tariffs were necessary in order to force the U.S. to industrialize and compete economically with the world’s superpowers of the time. This idea is known as protectionism.

In maybe the best current example of the adage that politics makes strange bedfellows, U.S. Senator Bernie Sanders, of Vermont, has long been a champion of protectionist policies as a strategy to boost the American working class.

How willing Trump is to follow through on threats of tariffs remains to be seen. Though the long-term benefits of protectionism are a possibility, they are not guaranteed. Many would argue the lack of competition from international trade would eventually lead to American companies making the prices for their products artificially high.

What would be certain is widespread high tariffs would make it difficult for consumer prices to remain stable, much less drop, in the short term. For someone like Trump, who seems to focus on the immediate over the future and who campaigned on being able to drop consumer prices, further rising prices would be a tough sell – even for the person who literally wrote the book on “The Art of the Deal.”