The idea of comparative advantage is do what you're good at, let other people do what they're good at,

and then you trade, and everybody's made better off.

That was Charlie Wheelan, a professor of business and public policy at Dartmouth.

I'm Motley Fool producer, MacGaree. Charlie Whelan is a best-selling author whose books include naked economics, naked money, and naked statistics. As you'll hear in a minute, Charlie

is really great at making the complex

not so complex. Motleyful analyst Buck Hartzell and Motleyful contributor Rich Lumelo recently had a chance

to talk with Wheelan about trade, technology, and a whole lot more. I'm going to start off,

first of all, with tariffs, because obviously there's been since April 2nd, so-called Liberation Day, there's been a lot of changes in tariff policy. So maybe just for kind of our listeners, can you give us an idea like, what is a tariff? And then we'll talk a little bit more about it. But I'll say, first of all, just kind of what is a tariff? It's a tax. It's a tax on something that is imported. It's an age-old tax because back before we had the capacity to do income taxes or sales taxes, the easy way to collect a tax was with customs houses. So if you go to any big old city, there's always some beautiful building. It's the

customs house. Where are we going to get money from the ships that come in that are selling tea or

wool or something else like that? So it's an age-old way of taxing things that come into the

country. It is paid by the people who are actually bringing it in. But that's what we call

like the statutory instance. That's who actually writes the check. But I think for your listeners and to understand the issue, there's a more

important concept, which is kind of what's the economic incident? So who actually bears the

cost? It's not the same. So I'll turn your attention to something that most people are more

familiar with, which is something like a property tax. And you say, well, who pays the property tax? People who own property.

But then if you say, well, I'm a renter so I don't pay property tax, that's not true, because

your landlord pays it and then passes it along. So the big economic question right now is how

much of these tariffs are getting passed along and to whom?

And that is a very complicated but very important question.

Warren Buffett said something I thought was kind of interesting.

He said, I guarantee you that these tariffs aren't paid by the tooth fairy.

Right.

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