There’s an overlooked by current administration challenge with implementing tariffs on a massive scale. It’s a logistical and enforcement nightmare. Here’s how it generally works and the potential pitfalls:
1. Measurement and Imposition:
Harmonized System (HS) Codes:
- Goods entering the U.S. are classified using the Harmonized System, an internationally standardized system of numerical classification. Each product has a unique HS code.
- Tariffs are applied based on these HS codes.
Customs and Border Protection (CBP):
- The CBP is responsible for enforcing tariffs.
- Importers must declare the HS codes of their goods on customs forms.
- CBP officers inspect shipments to verify the declared information.
Automated Systems:
- CBP uses automated systems to process customs declarations and identify high-risk shipments for inspection.
- These systems rely on data analysis, risk assessment, and intelligence.
Valuation:
- Tariffs are often calculated as a percentage of the declared value of the goods.
- CBP officers may challenge the declared value if they believe it’s too low.
2. Challenges and Potential Violations:
Misclassification:
- Misclassifying goods (e.g., avocados as oranges) is a significant risk.
- This requires a high level of expertise from CBP officers to identify discrepancies.
- The sheer volume of shipments makes it impossible to inspect every container.
Undervaluation:
- Importers may understate the value of their goods to reduce tariff payments.
- This is difficult to detect, especially with complex or unique products.
Smuggling:
- Tariffs can incentivize smuggling, especially for high-value goods.
- This requires increased border security and law enforcement efforts.
Transshipment:
- Goods may be shipped through third countries to avoid tariffs.
- This requires cooperation with other countries to track the origin of goods.
Documentation Fraud:
- Importers may falsify documents to misrepresent the origin, value, or classification of goods.
Volume:
- The sheer volume of goods entering the US makes perfect control impossible.
3. The Prohibition Analogy:
Incentive for Evasion:
- High tariffs, like Prohibition, create a strong incentive for evasion.
- The potential profits from avoiding tariffs can outweigh the risks of getting caught.
Enforcement Challenges:
- Enforcing tariffs on a massive scale is as challenging as enforcing Prohibition.
- It requires significant resources, manpower, and technology.
Corruption:
- The potential for corruption is high, as customs officials may be bribed to overlook violations.
Black Market:
- Tariffs can create a thriving black market for smuggled goods.
In conclusion:
Implementing and enforcing tariffs on a massive scale is a complex undertaking with significant challenges. While technological tools and systems help, the sheer volume of trade and the strong incentive for evasion create a constant battle. The comparison to Prohibition is apt, as both situations highlight the difficulty of controlling human behavior when there’s a strong economic incentive to break the rules.
