As President Joe Biden and former President Donald Trump have both secured enough delegates to clinch their party nominations, policy experts are now examining how proposed tariffs could potentially affect American consumers. While the Trump campaign has not released many tax policy specifics, Trump has reiterated his support for tariffs, which are essentially taxes imposed on imported goods from other countries. Trump stated his belief in tariffs during an interview on CNBC’s “Squawk Box” and indicated that he would be likely to reinstitute duties if elected for a second term. Throughout his first term from 2017 to 2021, Trump implemented various tariffs aimed at boosting U.S. industries, including levies on China, Mexico, the European Union, and other countries. Some of these tariffs have been maintained by the Biden administration.
Despite the lack of specifics from the Biden campaign regarding tariffs, Trump has proposed a baseline 10% tariff on all U.S. imports, along with a levy of 60% or higher specifically on Chinese goods. Policy experts such as Erica York, a senior economist and research manager with the Tax Foundation’s Center for Federal Tax Policy, have expressed concerns about the potential negative ramifications of such high tariffs. For instance, a study conducted by the Federal Reserve Bank of New York revealed that the tariffs implemented in 2018 cost the average household $419 per year. Furthermore, a 10% tariff would result in a significant increase in taxes for U.S. consumers, potentially exceeding $300 billion per year, and could lead to retaliatory tax increases on U.S. exports by trade partners.
While Trump suggested that China would bear the brunt of the tariffs, experts like Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, have pointed out that American consumers are the ones ultimately affected. When tariffs are raised on imported goods, the additional costs are typically passed on to shareholders, workers, and consumers by American companies. This means that American consumers could end up paying more for both imported and domestic products if tariffs are increased. Critics have warned that higher tariffs could contribute to inflation, but data from Trump’s first term in office did not show the consumer price index exceeding the historic average.
Overall, the debate surrounding proposed tariffs highlights a critical issue that could significantly impact American consumers. As both presidential candidates iterate their positions on tariffs, it is essential for policy experts and consumers alike to carefully consider the potential consequences of these policies on the economy and everyday livelihoods.
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