A woman shops at a Walmart Supercenter store in Rosemead, California. Walmart has said it will raise ... [+]
Tariffs are taxes that harm the average consumer. This is particularly true with the tariffs Donald Trump has levied on imports from China.
The ever-escalating tariffs on Chinese goods are producing increased costs for American consumers. “On an annual basis, when adding the tariffs in effect and the tariffs set to go into effect by the end of 2019, the costs of the tariffs to consumers will be $259.2 billion. That is, the tariffs will cost the average household $2,031 per year, and will be recurring so long as the tariffs stay in effect,” according to a new National Foundation for American Policy (NFAP) study.
The costs may go even higher. “If all tariffs threatened by the Trump administration are imposed, combined with the current tariffs in place, the annual cost to U.S. consumers would be $461.1 billion and the cost for the average household would be $3,614,” conclude David G. Tuerck, a professor of economics at Suffolk University and president of the Beacon Hill Institute, and William Burke, director of research at the Beacon Hill Institute, the authors of the NFAP report. (Tuerck and Burke are both research fellows at the National Foundation for American Policy.)
How does the potential $3,614 a year in costs to the average household break down? “This figure includes a threatened increase to 30% on the remaining $272 billion in imports from China (increasing the burden on consumers by $50.6 billion annually and the cost per typical U.S. household by $396) and potential 25% tariffs on all automobiles and automotive parts (increasing the annual burden to consumers by $151.3 billion or $1,186 per year for the average U.S. household),” according to the research.
This means the price of shoes, cell phones, clothes for children and many other items will be higher. New tariffs of 15% on Chinese imports went into effect on September 1 and additional tariffs of 15% will be placed on goods from China on December 15, 2019, for tariffs on a total of $272 billion worth of Chinese-made products. Moreover, Donald Trump has stated that if a trade deal cannot be reached with China, then tariffs of 30% will be levied on the same $272 billion in goods.
The tariffs are overwhelming the Trump administration’s argument that its tax policy and deregulation agenda are helping the U.S. economy, since tariffs are both a tax and a form of business regulation. “By December 31, 2019, the dead loss of the tariffs imposed under the Trump administration will total $32.1 billion. That will negate most of the $46.5 billion in savings from deregulation identified to date by the Office of Management and Budget (OMB),” according to the National Foundation for American Policy study.
In fact, the tariffs may soon eliminate all the economic gains from deregulation, even using the administration’s own calculations on regulatory savings from OMB. “Imposing these tariffs [of 30% if no trade deal is reached] in addition to those already imposed would leave an annual dead loss to the economy from the Trump administration’s tariffs of $77.9 billion, more than the $46.5 billion [OMB identified] in regulatory cost savings as of June 30, 2019,” the research found.
The Trump administration may ask Congress to pass a tax cut to compensate for the economic damage caused by the tariffs, even though administration officials, including the president, have argued the tariffs aren’t hurting Americans. Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, said, “A middle-class tax cut would be: Don’t impose the tariffs on China.”
The tariffs have resulted in retaliation by China and other countries, which has reduced U.S. exports. Moreover, it is clear the tariffs have achieved no policy objectives. Unless removed, the tariffs will simply be a large and permanent tax increase that raises prices for Americans on the products they buy every day.
