(Reuters) Walmart warns Trump’s tariffs may force it to hike prices

By | September 24, 2018

And that’s OK.

This is exactly what the tariff should result to (at least part of the intention).

The tariff episode is really a mean to an end to get to the final objective when countries will lower or eliminate the tariff all together. However, given the disparity of development in different nations, the “grand” goal won’t be achieved at this stage. Then the secondary goal is exactly what Walmart is warning about here: higher prices of consumer goods in USA.

For decades, US consumers enjoyed a low price of most of the consumer goods than people in other developed countries. Just ask a Canadian how much they are paying for groceries and household items. Ask a Chinese how much gas they are paying to fill up their car. Ask a European resident how much they pay for food, household items, Washing machines, phones and toys. Yet on top of the higher prices, some of them also pay a VAT tax to the government.

In US, stuff has been cheap for long time. People attribute the credits to the great globalization since the 1990s. However, how much is cheap enough? Are there any middle ground? If there is, the difference between the slightly higher price and current price should go to a fund which serves to help a part of the society that suffered badly from globalization.

That’s where this tariff comes in. It gives additional income to Government, who hopefully can take up such role of distributing to manufacturing workers who lost their job to someone in Asia, or car plant worker whose plant was moved to Mexico. There is really little option for these people. When globalization mobilize capital significantly, Labor is far less mobile. When labor can’t move and follow the capital, they are stuck and become the “road-kills” and lose the job they need badly to support their family.

Good luck telling a 50-year old welder at Detroit to learn java programming language and move to Silicon Valley. It is not going to happen. They need an opportunity to work on some job that probably need certain assistance from the society who overall benefited a great deal from the lower cost or prices from globalization.

Only government can play that role. Anyone crying about the higher price from tariff, think that the $1 more you paid for a T-Shirt, collected together will become a useful fund to educate or recreate opportunities for dislocated workers in areas where globalization caused job losses not job creations.

The higher prices at Walmart may be the right price that can solve this society issue after all, although no one likes higher prices. No one likes to find out that their job is gone to someone in China and their fellow citizens who happened picked Computer Science major in college is having parties every week.

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