Tariff - What's in a name?

Did we know that the word tariff comes from a guy named Tariff? I certainly didn’t and shame on me for never thinking to look up the word.

In searching for a topic this week, I stumbled upon this article out of South Africa, from Engineering News. (What, you don’t subscribe?)

Fans of 8th Century Spanish history can skip ahead….

At the southern tip of Spain, even south of Gibraltar, is the coastal town of Tarifia. It was founded around the year 700 by Tariff Iban Malik, a pirate who led an invasion up from northern Africa and into Spain.

As the article states:

“When the Moors founded the town, they prepared the way for a system that is probably the most important element in international trade. As the name suggest, it is the ‘tariff’. When commerce began to expand from the Mediterranean, a gang of racketeers made Tarifa their headquarters, holding up all merchant ships and levying a charge – a fixed rate – on all merchandise passing in and out of the Strait of Gibraltar. The mariners called this charge a ‘tariff’ and the word quickly became familiar in England, since its vessels formed the bulk of the merchant trade of the day.”

Who wouldn’t want to pay taxes here?

I wonder if Mr. Iban Malik would change the fee on ships daily, threaten to add more, then change his mind, then say the changes were temporary? One will never know, but it’s a good thing “Auto Parts” hadn’t been invented yet.

The view on tariffs this week turned from commentary to reality, as manufacturers have come the belief that tariffs on Chinese produced goods will remain higher for longer. Meanwhile, all other tariffs were reduced to 10% across the board, sending a sigh of relief for those who have diversified their supply chain since COVID.

Brands are writing letters to their representatives, or adding a Tariff surcharge to their invoices. After ramping up production to prepare for the tariffs unknown, companies are now not placing any orders at all!

Completely normal stuff, right?

The easy solution is to turn to a domestic supplier. Not so fast.

Whereas tariffs can be used to protect industries and level the playing field, today’s situation is creating winners and losers based solely on policy. Policy that expires faster than a carton of milk. As tariffs on Chinese goods continue to rise and rise, China is responding with similar retaliatory tariffs on US goods. And yes, we export billions of dollars of goods to China, and certain producers (agriculture) rely heavily on trade with China.

It reminds me of the playground conflicts my kids have:

“I’m the best” (34%)

“No, I’m the best” (34%)

“No, I’m the best” (245%)

The kids usually forget about this argument a few minutes later and become best friends again.

Will China and the US follow the same path? I think so. As I wrote last week, the higher the tariffs go the closer we come to a resolution.

And yes, the current tariff on Syringes and Needles is 245%.