A baby monkey in Japan and the United States Supreme Court do not usually belong in the same economic conversation. However, this week presents an exception.
At the Ichikawa City Zoo, a clip of a six-month-old macaque named Punch, or Panchi-kun, clinging to a plush orangutan after his mother abandoned him went viral all over the world. The impact extends beyond mere sentimentality. Reports indicate that sales of the IKEA plush toy embraced by Punch have surged after the story spread, resulting in the product selling out in several markets.
Concurrently, in Washington, the US Supreme Court struck down President Donald Trump’s sweeping use of emergency tariff powers, reigniting the debate over how and when governments should tax imports.
A viral monkey, a constitutional ruling, and a surge in plush toy sales collectively raise a significant question: When a tariff is imposed on a product, what precisely is being taxed?
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Why tariffs exist in the first place
Before addressing this question, it is important to clarify that tariffs are not, by definition, irrational. There is an economic rationale for certain tariffs.
Nations employ them to counter dumping, a practice in which foreign firms sell products below cost to eliminate domestic competition. They impose anti-subsidy duties when competitors receive substantial state support. Tariffs may also respond to persistent currency distortions that artificially lower export prices. Strategic tariffs can protect nascent industries or safeguard sectors linked to national security.
This is precisely why the World Trade Organisation framework permits anti-dumping and countervailing duties under specific regulations. Trade defence instruments are necessary because markets are not always perfectly equitable. Therefore, the justification for some tariffs, particularly those that are targeted and rule-based, is well established.
However, the plush toy in Punch’s arms invites a deeper exploration of how tariffs function within the context of global supply chains.
A toy without a passport
The orangutan toy that Punch clings to is likely the product of a fragmented global value chain. Its design may originate in one country, the raw materials in another, and the stitching and assembly in a third. Shipping networks move it across oceans, retailers in Japan sell it, and social media platforms amplify its presence. By the time it reaches Punch, it incorporates inputs from multiple economies.
However, tariffs traditionally assume that goods possess a singular nationality. When a product crosses a border, it is labelled “foreign” and subjected to taxation. This logic was applicable in an era characterised by vertically integrated production, but it becomes more complex when production is dispersed across continents.
If a tariff were imposed on Punch’s toy, the question arises: who bears the burden? Is it the assembly plant abroad, the firm that designed it, the domestic retailer importing it, the shipping company, the consumer, or even domestic suppliers who contributed intermediate inputs earlier in the chain? The answer is rarely straightforward.
In modern trade, tariffs do not merely tax countries; they tax entire supply chains.
Where the value really lives
In discussions concerning tariffs, a frequently overlooked aspect is the distribution of value within industries. In numerous sectors, the final assembly process accounts for only a relatively minor portion of the total value. Instead, factors such as design, intellectual property, branding, logistics, and retail margins significantly determine the final price. The intangible value often exceeds the cost of physical production. For instance, Punch’s attachment to his plush toy is not based on its country of origin, but on the comfort it provides. Similarly, consumers prioritise trust, familiarity, and design over geopolitical labels.
When a tariff is imposed at the border, it affects the entire declared value of the product. It does not specifically target the portion produced in a subsidised factory or the segment that may benefit from currency distortions. As a consequence, it increases the cost of the entire value chain embedded in the product.
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The limits of clean economic borders
None of this undermines the justification for targeted trade remedies. When market distortions arise from dumping or unfair subsidies, corrective measures are warranted.
However, broad tariffs, particularly those framed as a means of taxing a rival nation, often obscure the intricate interconnections of modern production. The viral success of Punch’s toy exemplifies this complexity. Its increased sales across various markets demonstrate how attention can be converted into revenue, transcending national boundaries. The emotional and digital amplification of the product now likely surpasses its manufacturing costs by a considerable margin.
Yet, trade policy continues to operate at physical borders. The viral monkey and the constitutional debate over tariff authority expose a structural tension. Policymakers often discuss the taxation of foreign goods, while firms operate within multinational networks and consumers prioritise brand and price over national origin. The plush orangutan in Punch’s arms does not argue against all tariffs; rather, it serves as a reminder that, in today’s economy, a tariff seldom targets a single country. Instead, it affects a network of interdependent actors.
In a globalised economy, where even a stuffed toy is assembled across continents, the notion of a purely foreign product is more political shorthand than economic reality. Any serious discussion on tariffs must begin with an acknowledgement of this reality.
Bidisha Bhattacharya is an Associate Fellow, Chintan Research Foundation. She tweets @Bidishabh. Views are personal.
(Edited by Asavari Singh)