.While President Joe Biden has outlined a spate of new measures and initiatives to be implemented if he wins the November elections, his opponent, Donald Trump, has yet to reveal most of his plans, except for one idea—more tariffs. However, analysts have found that Trump’s proposed tariff plan may leave the average American family $1500 a month worse off. Here are the full details.
The “Tariff Man” Returns
“I am a Tariff Man,” Trump wrote in 2018, a sentiment he’s carrying forward to the upcoming election. Trump wants more tariffs – much more than we currently have. Tariffs are taxes placed on imports from other countries, and Trump has repeatedly floated the idea of implementing more tariffs during his current campaign.
In late August, Trump proposed his so-far flagship policy: implementing a 10% tariff on every single good coming into the U.S. In February, he mentioned imposing a 60% tariff on all Chinese imports if he were to win. Most recently, at a campaign rally in Ohio, Trump promised “a 100%” tariff on cars made from outside the U.S.
Trump also warned of a “bloodbath” for the country’s auto industry if he was to lose the race for the White House.
Trump’s Strategy to Boost Job Numbers
Trump’s plan is to have higher tariffs to increase the number of jobs. Trump announced his flagship policy by saying, “When companies come in and they dump their products in the United States, they should pay automatically, let’s say, a 10% tax … I do like the 10% for everybody.”
Higher tariffs will raise the prices of foreign goods and can lead to people switching to cheaper domestic products instead. Trump is betting on an increased demand for domestic products, which will spur businesses to increase their production, thereby creating more jobs.
The Reality Check
Now, however, the independent Center for American Progress Action Fund (CAP) has crunched the numbers on Trump’s proposed 10% tariff and is indicating that it might not be as good as it seems on paper. Their analysis found that “the proposed across-the-board tariff would amount to a roughly $1,500 annual tax increase for the typical household.”
This increase includes a $90 uptick in taxes on food, another $90 on prescription drugs, and a $120 increase on oil and petroleum products.
How Trump’s Tariffs Could Hit American Families
A $1500 increase in yearly tax would hit consumers—average American families—hard. As the cost of living is consistently rising, a rise this high could spell disaster. CAP argues that this tax hike would lead to higher prices for various goods, all while failing to improve U.S. manufacturing and employment opportunities.
While CAP states that tariffs, if focused on solving a specific problem, can be effective solutions, they think that this tax “is reckless.”
The CAP report alleges that U.S. importers would be hit hardest by new tariffs, which are “levied on U.S. importers when their purchased product crosses into the U.S. market” and not a tax that foreign exporters would pay.
Importer Burden
There are actually no Chinese companies within the top 10 importing businesses in the U.S., so Trump’s 60% tax would hit these U.S. importers who are bringing in “products for distribution to U.S. consumers.” CAP argues that Trump’s plans show “a complete misunderstanding of how tariffs actually work” and “would raise consumer costs and directly feed into inflation.” Trump’s allies have allegedly stated that
Trump’s new import tariff would directly affect grocery store prices. Average food items, like fresh fruit, fresh vegetables, coffee, and seafood, would all see meteoric rises in price, as between 40-85% of these items are imported.
While you may think that a rise in domestic consumption would mean food made in America becomes cheaper, farmers would have to increase prices to cover the extra costs of importing fertilizer (which the country heavily imports) and farm equipment.
Trump’s Trade Legacy
During his administration, Trump implemented many tariffs, effectively steering portions of the GOP away from its traditional free-trade stance. He implemented tariffs on steel and aluminum imports and began a trade dispute with China by implementing 25% tariffs on numerous Chinese goods.
The CAP report argues that this tariff-heavy stance was ineffective and did not create jobs, pointing to a report that found “import tariffs on Chinese and other foreign goods had neither a sizable nor significant effect on U.S. employment in regions with newly-protected sectors.”
If Trump wins the race to the White House in November, we may see the “Tariff Man” come back in full force.
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