Author’s note: This is the economics classic I, Pencil by Leonard Reed rewritten with tariffs added. I took the story and added tariff rates where appropriate to show how tariffs drive up the cost of consumer goods in intricate and hard-to-predict ways.
I am a lead pencil — the ordinary wooden pencil familiar to all boys and girls and adults who can read and write. Writing is both my vocation and my avocation; that’s all I do.
You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery — more so now, in this tariff-laden world, than ever before. Yet I am still taken for granted, my cost seen merely as a function of materials and labor. Rarely does anyone wonder about the intricate dance of international cooperation that brings me into being — or the added costs governments now impose each time I cross a border.
I, Pencil, simple though I appear to be, merit your wonder and awe. If you can understand the miracle I symbolize — even now, with bureaucratic hands weighing down each step — then you may better understand the power and fragility of the free market.
Pick me up and look me over. What do you see? Some wood, lacquer, labeling, graphite lead, a bit of metal, and an eraser. Not much, it seems.
Innumerable Antecedents
My family tree begins with what is, in fact, a tree — a cedar from Oregon. American-grown, I incur no tariff here. But when I am processed, in part, abroad or returned as a final product, the rules change.
The saws that cut me may be made of foreign steel — imported from South Korea, perhaps — which means a 25 percent steel tariff, plus a new 25 percent reciprocal tariff on all Korean goods. That’s a 50 percent markup before the first cut.
The trucks that haul me? Likely assembled from parts sourced in Mexico, Japan, and Taiwan — each now subject to 25 percent, 24 percent, and 32 percent tariffs, respectively. Unless fully compliant with USMCA, each component crossing the border gets hit.
The slats, once cut, are often tinted with dyes derived from European chemicals. That’s a 20 percent EU tariff plus the 10 percent baseline — 30 percent total. Even the kiln used to dry the slats may include Japanese electronics — taxed again.
The machinery in the San Leandro mill? Likely imported from Germany or Japan — another 20-24 percent tariff. Multiply that across $4,000,000 in machinery, and the hidden costs add up quickly.
My graphite comes from Sri Lanka — formerly Ceylon — which ships it via international ports. Each leg of the journey may involve tariffs: the container ship’s hull steel, the diesel fuel refined abroad, even the packing sacks made from Chinese polypropylene — all taxed. China faces a current 20 percent tariff, with an additional 34 percent reciprocal rate starting tomorrow. Today, that’s 20 percent — tomorrow, 54 percent.
The clay for my core is from Mississippi — domestic, tariff-free. But ammonium hydroxide and sulfonated tallow may be synthesized using chemicals or base compounds imported from China or the EU. Those, too, are taxed — 20 percent minimum.
The wax used to treat my graphite? Candelilla wax from Mexico (possibly tariff-free under USMCA), and paraffin from petroleum refined in Venezuela. Venezuelan oil incurs a 25 percent penalty if purchased from non-exempt nations.
My lacquer? Often made with castor oil from India and pigment compounds from Europe. Again, 10–20 percent in added cost, depending on the country of origin.
My labeling involves heat-applied carbon black mixed with resins. Some of these chemicals are derived from Southeast Asia — Vietnam, Cambodia — now subject to 46 percent and 49 percent tariffs, respectively. What began as pennies in pigment ends up nickels in penalties.
My metal ferrule is brass — an alloy of copper and zinc. Much copper is mined domestically, but zinc often comes from Canada or Mexico. If the final smelting occurs abroad and is imported without USMCA compliance, there’s a 25 percent tariff. If compliant, I dodge the fee — but verifying and certifying compliance incurs its own cost.
The eraser, my crowning glory, uses factice — made by reacting rapeseed oil with sulfur chloride. Rapeseed oil may originate from Europe or the Dutch East Indies — tariffed at 20 percent or more. Sulfur chloride may be synthesized from Chinese or Korean chemical stocks — 20–34 percent more.
Even the pumice — volcanic ash from Italy — and the cadmium sulfide pigment for coloring — likely imported — bring added costs. The eraser alone, a modest part of me, reflects the complexity of the world market and the long shadow of government duties.
No One Knows
Still think a pencil is simple? Consider this: no single person knows how to make me. Not the miner, the logger, the chemist, the shipper, nor even the CEO of the pencil company. Each performs his task with the goal of earning a living, trading his skills for other goods and services — not for me, specifically.
Now imagine each actor navigating a new tariff chart: estimating costs, altering suppliers, or filing exemption paperwork. Each bureaucratic friction adds to costs for producers, reducing supply, and increasing the prices you pay.
No Mastermind
Despite these burdens, there is no mastermind coordinating my birth. There is only the Invisible Hand — now blunted, perhaps, but still alive. Every actor contributes freely, hoping to trade their effort for something they want more — not by decree, but by choice.
Yet these choices are not as free as they once were. Each new tariff nudges decisions — perhaps away from the most efficient route, perhaps away from innovation or quality. The market adapts, but not without loss.
The Miracle Burdened
In the old days, I symbolized the miracle of cooperation. Today, I also bear testimony to the compounding burden of policy. Consider this:
- My graphite, taxed 20 percent on entry;
- My ferrule, with 25 percent duties on non-compliant brass;
- My lacquer, pigments, and waxes — another 20–49 percent depending on origin;
- My labeling chemicals — some at 54 percent, starting tomorrow
Individually small, these costs aggregate into dollars. A pencil that once cost 10 cents may now cost 15 or 20 — not because wood, graphite, or labor are more scarce or more demanded, but because every border I cross charges a toll.
The Lesson Remains
If you can see the miracle that I am — this humble pencil made by millions, each adding a part without knowing the whole — then you can also see how fragile that miracle is. Each new restriction, each tariff, each form must be paid for — not in taxes alone, but in diminished freedom, lost efficiency, and fewer pencils for more money.
The world is more connected than ever. But with each new border toll, we risk forgetting that prosperity is not planned — it is allowed. I, Pencil, still bear witness: Let creative energies flow. Let borders be bridges, not barricades. Only then will the miracle flourish again.
