Presidential candidate Donald Trump’s new trade war could cost middle-class families at least $1,700 a year, a shocking new report has warned.
If he takes office later this year, the former president wants to reduce America’s reliance on income taxes and instead make up for the deficit by raising import tariffs.
Trump has argued that tariffs help American workers, but new research says the policies could harm American workers and industries and worsen international relations.
Trump’s aggressive trade proposals would cost consumers at least $500 billion a year – or at least 1.8 percent of GDP – according to a new study. paper published by the nonpartisan think tank Peterson Institute for International Economics.
That’s five times the cost of the US-China trade war that the former president started in 2018, he found.
Presidential candidate Donald Trump’s new trade war could cost middle-class families at least $1,700 a year, new report warns
The presidential candidate proposes a 60 percent tariff on all Chinese goods and a 10 percent “blanket” tariff on all US imports worth $3 trillion.
He also calls for an extension of tax cuts set to expire starting in 2017, while suggesting a possible new round of tax cuts.
“The tariffs would reduce after-tax income by 3.5 percent for those in the bottom half of the income distribution and would cost a typical household in the middle of the income distribution about $1,700 in tax increases each year,” the report reads.
“If carried out, these measures would increase the distortions and burdens created by the rounds of tariffs applied during the first Trump administration (and sustained during the Biden administration), while inflicting massive collateral damage on the US economy.”
He stated that these policies are more likely to hurt than help the low- and middle-income Americans they are intended to benefit.
The tax impact of $1,700 for the typical American household is only the minimal impact possible, the report stresses.
This estimate does not include possible additional damage from foreign retaliation and loss of competitiveness.
“This is the tip of the iceberg,” said co-author Kimberly Clausing, a senior researcher at the Peterson Institute. cnn.
‘The cost of retaliation will be very high. The Europeans will apply tariffs to us. Mexicans and Canadians will be very upset. “People are not going to stay calm,” he said.
The think tank’s analysis claims that tariffs on imported goods “are passed on in full to American buyers,” while Trump has suggested that other nations will pay the American tariffs.
The United States International Trade Commission found in a study last year that U.S. importers “borne almost the entire cost” of the tariffs.
The agency estimated that prices rose about 1 percent for every 1 percent increase in tariffs on Chinese-made products, steel and aluminum, CNN reported.
“In contrast to Trump’s frequent and erroneous claims that foreigners bear the brunt of tariffs, economists have long understood that tariffs burden domestic buyers of imported goods,” the report reads. from the Peterson Institute.
However, former President Trump is not the only one embracing tariffs: both parties have shown their support for the measure as a way to show that they are tough on China.
President Joe Biden has also maintained many of the tariffs that Trump introduced during his presidency.
The report says aggressive tariffs are more likely to hurt American workers than help them.
Trump’s aggressive trade proposals would cost consumers at least $500 billion a year, according to the report.
Biden has announced higher tariffs on electric vehicles from China.
“President Biden, despite having ample opportunities, has failed to eliminate tariffs imposed on China during the Trump presidency,” the Peterson Institute report reads.
He noted that tensions with China may have made it difficult to reverse many of the tariffs, but they still continue to hurt American households, although to a much lesser degree than Trump’s new proposals.
Earlier this month, Biden announced higher tariffs on $18 billion worth of Chinese goods, including electric cars, critical minerals and solar products and batteries.
Karoline Leavitt, national press secretary for the Trump campaign, told CNN in a statement: “The American people do not need ‘documents’ from so-called ‘experts’ to know that bidenomics has stolen thousands of their hard-earned dollars,” and they will have “More money will return to their pockets with President Trump back in the White House.”
