The ‘Tariff Man‘ returns.
Throughout the years of his presidency, President Donald Trump was a big fan of tariffs slapped on imported goods. Or shall we say ‘yuge?
In an interview given to his former advisor Larry Kudlow on Fox Business last week, Trump spoke passionately about using tariffs as a weapon during his tenure and his wish to impose a tax of “10 percent for everybody” if he wins another one. Unknown sources in Trump’s orbit told the Washington Post that it would be only the beginning of Trump’s wish for another trade war. This will have huge costs.
Used as a retaliatory weapon, a means of raising revenue, or whatever politically convenient reason given, these tariffs end up being what they always are: taxes passed onto consumers.
An analysis by the Tax Foundation found that the Trump tariffs imposed an estimated $80 billion on Americans they otherwise wouldn’t have paid. They found that, over the long run, Trump tariffs will cost an estimated 0.21% in long-run GDP. And that decline will only continue.
Of course, these are tariffs that remain largely in place in a Democratic administration. President Joe Biden has made no effort to repeal Trump’s tariffs, and most of the political landscape has (to our chagrin) abandoned free trade as a vital plank of American economic trade policy.
This represents a newly bipartisan mantra that increased taxes on consumers are somehow desirable — as long as revenues are being paid to the US Treasury and fewer imports make their way to American shores.
As I mentioned in 2020, Trump’s tariffs had a hand in directly raising prices for consumers.
But the fact remains that Trump “Tariff Man” trade wars have been disastrous for all of us. A 2019 report by the Brookings Institution estimated ongoing trade wars cost the U.S. hundreds of thousands of jobs and potentially billions in economic growth. Washer and dryers, for example, are now 12 percent more expensive now than before Trump waged his trade war.
Regardless of whatever rhetoric may emanate from political figures, tariffs are taxes. They are higher prices consumers must pay for goods. And what President Trump is suggested, in effect, is a major tax hike that would prove to be a disaster.
Whether blue or red, tariffs make it more expensive for consumers to buy the goods they want and need, and that shouldn’t be a winning strategy for anyone, least not in an inflationary economy where prices are rising everywhere.
If all consumers have to hope for in the 2024 election is higher tariffs and taxes, it will be a sore time for us all. Let us ensure that politicians understand that these tariffs are real costs imposed on people, and will have consequences for us all.
