Refute of Secretary Bessent

Interesting exchange between Treasury Secretary Scott Bessent and Gene Robinson on MSNBC, who was playing “gotcha” journalism, that the left is claiming to be a vindication that tariffs are bad for the American consumer and, by the transitive property of equality, Trump is therefore bad for America. There was wild celebration and gloating on the left. Headlines announced that Bessent was “trapped, “cornered”, and “brutally dismantled” by lightweight media sources such as rawstory.com, the New Republic, Yahoo Finance, and the most imbecilic of news sources: Facebook. What, nothing from The View? Please. Alas, the progressives are again showing a profound ignorance of exactly how capitalism works. But what do you expect from an entire class of partisans who have either never run a business or never worked in the private sector? Bessent attempted to explain the complexity of raising tariffs on Brazil, in this case, but was cut off when Robinson repeatedly asked who actually pays for those tariffs. Bessent’s answer was finally whittled down to conclude that the receiver of the goods ultimately pays the tariff, which may then be passed on to the consumer, AHA, screamed the left as Robinson spiked the football. So, are American businesses and consumers paying more for Brazilian goods? Not so fast, simpletons. 

Ribibson should have allowed Mr. Bessent, who, along with Messrs. Trump and Lutnick, knows much more about economics and markets than… virtually anyone on the left. If Americans are ultimately footing the bill for tariffs, then why is the world clamoring to cut deals with the Trump administration to balance trade? Hmmm, says the intelligent American, likely not a person with blue hair and a septum piercing. Or an associate editor of the Washington Post. Shall we begin? 

Let’s use coffee as an example. Scenario number one: If the price of Brazilian coffee increases significantly because the American business is forced to pass the tariff cost on to the consumer, the consumer may choose to buy Colombian coffee instead. The American business selling the coffee sees this trend as a reduction in sales and stops purchasing Brazilian coffee, thus avoiding paying the tariff altogether. The Brazilian coffee grower and, in turn, the Brazilian economy suffer as a result. The only downside is that the American consumer has to forego their Brazilian coffee fix. 

Scenario number two: The American business may decide unilaterally that Brazilian coffee is too expensive with the added tariffs and will seek alternative suppliers in countries with lesser tariffs or those offering their coffee at reduced prices. The Brazilian economy and the Brazilian coffee grower suffer as a result. The American consumer only suffers from being unable to procure Brazilian coffee from that particular American business. 

Scenario number three: The Brazilian coffee grower is faced with a choice: He can significantly reduce the price of his coffee to offset the tariff, essentially paying the tariff. This results in a reduction in Brazil's GDP and lost revenues for the Brazilian coffee grower. American businesses and American consumers are unaffected by this scenario. 

Scenario number four: Brazil cuts a deal with the Trump Administration to reduce tariffs on Brazilian products, including coffee, and American goods exported to Brazil. Everyone wins. 

So, in short, there may be pain in the short term if Americans can no longer afford certain products, such as Brazilian coffee, German cars, French wine, or Swiss chocolate. Of course, if spoiled Americans absolutely have to have those items, then yes, in scenarios one and two, they will have to pay more. However, as the largest economy in the world, market pressure will ultimately come to bear. Thus far, we have seen countries lining up to make trade deals with this administration, which represents the largest consumer market in the world. Yes, Gene you are apparently unaware, that would be us.