What's in a name?

Words are wonderful, but sometimes slippery, things. Choosing the right ones for the right moments takes practice and sensitivity to context, both of which are important for my students who are assessed on their understanding of history (i.e. evidence that has been written down with words). When I see misused or ambiguous words in their writing, I ask for clarification. For example, it is possible to "delve" into a topic (although I would rather you do not), but not to "excavate" one.

So it is with great interest that I am following the current US Supreme Court hearing on the validity of President Trump's tariffs. At the heart of the argument is whether a tariff is a tax; if it is, then Trump has no authority to usurp unilaterally that authority from the American congress and would need its approval (and even then, it may not be allowed). The counter argument put forward by Trump's solicitors is that tariffs are not taxes but foreign policy and thus within the scope of the executive branch's jurisdiction. While this may seem like a semantic argument, at its core the lawsuit is about the separation of powers between co-equal branches (executive and legislative) of the American federal government.

Let's be clear: a tariff is a tax. This is something I teach to my students when we cover the collapse of globalization in the interwar period. Countries like the US enacted or raised tariffs to protect their domestic markets from imports, exacerbating unemployment and economic depression (including the Great one). Even the US government agrees; on the website of the US Department of Commerce (disclosure: I used to work for them), it states "a tariff or duty (the words are used interchangeably) is a tax levied by governments on the value including freight and insurance of imported products." 

Since the tax is on imports, which are foreign in origin, you may think this is foreign policy and thus validates the case made by the Trump administration. But undergraduate students of economics would also know that the cost of any tax is rarely borne solely by the producers (here, foreign companies). Depending on the elasticity of demand and market competition, some of the higher cost from added tariffs will be passed down to consumers (here, American households and firms). Even if a tariff is not a direct tax on Americans, in practice it is.

One could argue that the revenue generated from the tariffs could be redistributed back to consumers to compensate them for their higher prices, and to a degree that is possible. However, most taxes distort market efficiency and generate what economists call deadweight loss (i.e., Harberger triangles for those of you who are visual learners). Tariffs are no Ozempic--the loss is in total welfare, not in body mass. That means on balance society loses out in real terms, even if we include the revenue from tariffs.

Should we care about how we use words? For me (and my students), the answer is an emphatic yes. Being more precise with language and knowing what words mean is what makes interpersonal discourse possible and understandable. In the case with Trump's tariffs, it also means protecting democratic institutions and setting limits on executive power. As the American writer Gertrude Stein wrote, "a rose is a rose is a rose." And since it is exam season, maybe Trump needs to take the duck test.