The Trump administration’s tariffs on thousands of products from China and other countries has increased taxes on Americans by almost $42 billion, according to a new report from the Tax Foundation, which describes itself as the nation’s leading tax policy nonprofit.
“The burden of higher tariffs will fall disproportionately harder on lower- and middle-income households than on upper-income households,” says the conservative think tank, noting that the levies had reduced after-tax incomes by an average of $146 for taxpayers who earn between $27,740 and $43,800.
The report also estimates that tariffs imposed so far (protectionist “safeguard” measures involving duties ranging from 15% to 50% on Chinese solar panels and Korean-made washing machines, 25% duty on imported steel and 10% duty on imported aluminum, 25% duty on $50 billion worth of imports from China and a 10% duty on another $200 worth of Chinese imports) will cost the U.S. economy more than $30 billion (0.12% of GDP) and eliminate nearly 100,000 jobs.
Additionally, if Trump’s pending threats to impose further tariffs on virtually all Chinese goods and to also target foreign-made automobiles eventually materialize, American businesses and consumers will be hit with another tax hike of $129 billion. Under that scenario, middle-income households would lose a further $453, warns Tax Foundation analyst Erica York.
By coincidence, the report was published just as financial markets were being roiled by renewed fears of a prolonged trade war between the world’s two largest economies as uncertainty mounted over the “incredible deal” struck between Trump and China’s President Xi Jinping on the sidelines of the recent G-20 summit in Buenos Aires.
Adding to the confusion that ensued once disagreements between U.S. and Chinese officials over specifics of the 90-day ceasefire began surfacing in public, Trump weighed in on the matter by threatening to slap additional penalties on a wider range of Chinese products.
“President Xi and I want this deal to happen, and it probably will,” Trump posted on Twitter. “But if not remember, I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”
Besides helping send Wall Street into a dramatic tailspin, as with another claim several weeks ago that his tariffs were making the U.S. “richer than ever before,” Trump’s remarks once again underscored a concern that has often been expressed by virtually every mainstream economist, which is that the president “doesn’t quite understand fundamental concepts of international trade.”
The author of the Tax Foundation report was perhaps alluding to Trump’s mistaken views in this regard when summing up her findings. “The bottom line: Tariffs don’t in fact make Americans richer,” York said. “Tariffs reduce incomes for American taxpayers, and the effect is greater for middle and lower-income families.”