Tariffs or Prohibition 2.0?

SVET
2 min readMar 4, 2025

--

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.

Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle.

For more on Evernomics: https://evernomics.com/

Sign up to discover human stories that deepen your understanding of the world.

Free

Distraction-free reading. No ads.

Organize your knowledge with lists and highlights.

Tell your story. Find your audience.

Membership

Read member-only stories

Support writers you read most

Earn money for your writing

Listen to audio narrations

Read offline with the Medium app

--

--

SVET
SVET

Written by SVET

Angel Investor (20+ years), Serial Entrepreneur (14+ companies), Author (> 1M views), Founder of Evernomics, 40+ Countries

No responses yet

Write a response