Trumponomy? He would impose the equivalent of a huge tax increase

(Paul Sancya/Associated Press)

Trumponomy? He would impose the equivalent of a huge tax increase

Election 2024

Doyle McManus

February 26, 2024

If Donald Trump becomes president again, that will be one of his first steps

want to

taking money out of your pocket, just like a tax increase would.

Trump has not exactly outlined an economic program, but he has promised to impose a massive increase in tariffs on imports from almost every other country, from bananas and baby food to computer chips and machine parts.

And that’s the equivalent of a tax increase, because the cost of tariffs is paid almost entirely by the buyers of imported goods, whether they’re Walmart buyers or U.S. companies that rely on foreign components.

Trump boasts that the tariffs he imposed in 2018 and 2019 brought billions of dollars into the treasury, and promises a similar revenue boost in a second term. The United States will make an absolute FORTUNE, says his campaign website.

Here’s the problem: Contrary to what the former president seems to think, the tariffs are not paid by foreign companies or governments. They are initially paid by the American companies that import the goods, but those importers almost always pass the costs on to consumers in the form of higher prices.

This time, Trump is proposing a 10% universal tariff on goods from every country in the world. He has also heard about mega tariffs of more than 60% that he wants to impose on China in hopes of forcing Beijing to lower its tariffs and treat American companies fairly.

Economists say either


Tariffs would trigger price increases and drive up inflation.

That’s why traditional free-trade Republicans like Nikki Haley and Mike Pence think Trump’s proposal is a bad idea, as does almost every practicing economist.

“It’s madness,” said Adam Posen, president of the Peterson Institute for International Economics.

But wait, there’s more.

These higher costs would hit low-income people the hardest, because they spend a larger share of their income on goods.

If baby food prices rise 25%, low-income people will feel it more than people on Wall Street, Posen said. The burden of the tax falls disproportionately on the poor.

And when the United States imposes tariffs, the targeted country almost always does the same.

They’re not just going to roll over, Posen said. And they will be strategic; They will pick industries where the US will lose major market share because the retaliatory tariffs will drive up the price of American products.

We have recent experience with everyone


these problems, thanks to Trump’s previous tariffs. Take California almonds, the state’s most valuable export crop.

Until 2018, China bought almost all its almonds from California. But after Trump imposed tariffs on a range of Chinese products that year, China retaliated with tariffs on U.S. agricultural exports, including nuts.

Almond sales in California plummeted and Australian growers rushed to fill the gap. In a report for the Giannini



of Agricultural Economics from UC Davis, economists

Sandro Steinbachcq

and Colin A. Carter calculated that the episode cost the states’ almond growers approximately $875 million in lost revenue.

Other U.S. exporters to China, from soybean farmers to truck manufacturers, took similar hits.

Those costs could have been bearable if the tariffs had achieved their primary purpose, which is to protect and promote manufacturing jobs in the United States.

But they didn’t. A slew of economic studies have found that Trump’s tariffs had little or no positive impact on the industries they were intended to protect, and that the negative impact on the economy resulted in a net loss of jobs.

Tariffs on foreign goods have neither increased nor decreased U.S. employment in newly protected industries.


a team of economists led by

David Authorcq

from MIT reported last month.

For example, Trump wanted to protect steel industry jobs from foreign competition, but his tariffs on foreign steel didn’t help much. By the end of his presidency in 2021, the steel industry had lost several thousand jobs.

Meanwhile, these rates affect the most numerous

jobs inside

industries that buy foreign-made steel, including automakers and appliance manufacturers.

For every steel-producing job, we have about 80 steel-consuming jobs, noted Erica York of the conservative-leaning Tax Foundation. All of these industries were hit by higher costs, and many of them lost approximately 75,000 jobs

total positions

according to a study.

But Trump’s tariffs had an important side effect, the author and his colleagues reported.

Although the trade wars have failed to generate substantial job growth, the Republican Party appears to have benefited in the Rust Belt, the economists wrote.

Trump “may have received support from voters who were skeptical of the beneficial economic impact of tariffs but who the [his] intent to counter Chinese competition and protect American jobs,” they wrote.

Trump has long described himself as


Tariff Man convinced in his words that protectionism will always be the best way to maximize our economic power.

He’s wrong about that.

The new tariffs he has proposed will not save the economy. But they can help Trump win industrial states like Pennsylvania, Ohio, Michigan and Wisconsin, and that may have been the point all along.


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