Trump demands higher taxes, not just tariffs

Trump demands higher taxes, not just tariffs

On Tuesday, the former President Donald Trump was interviewed in Bloomberg in the Economic Club of Chicago, where he again tuned historical tariffs as a measure to strengthen the American production sector by asking foreign countries to the cash register.

the reality behind the tariffs

In view of the central importance of the economy in the race around the presidency in 2024, we should emphasize a fundamental economic fact: tariffs are a tax on the Americans. If you are wondering how it can be, you are not alone. Many people do not seem to understand this, including Trump, who repeatedly made false claims that China would pay the tariffs he raised. This is not how trade does not work - neither now nor in the past.

The effects of tariffs

simply to put it: If the US government decides to collect a customs (also as a tax), for example on Chinese goods, the money that flows into the US state treasury comes from the American company that imports the goods. In order for this company to remain profitable, it has to compensate for the costs elsewhere, which usually means that prices for consumers increase. A clear graphic from my colleagues clearly shows this.

confusion in the political discussion

This week underlined a widespread Tikok video of how political communication has moved away from reality. In this video, the Podcaster Sean Kelly interviews the progressive commentator David Pakman about Trump's economic measures. Kelly admits honestly that he is confused. "Wait a minute, don't pay a tariff now?" he asks. After Pakman's explanation of how tariffs damage American companies, Kelly is visibly confused and says: "I really had no idea, I thought China would pay ... why would he do that?"

economists and their concerns

economists both from the political left and the right -wing questions. But Trump remains stubborn. In the Chicago Economic Club, he refused to recognize that his extensive tariffs would increase the costs for everyday goods. "For me, the most beautiful word in the customs dictionary is," said Trump in one place. When Bloomberg asked News editor-in-chief John Micklethwait about the negative effects, Trump again emphasized that the politics "would protect the companies that we have here and the new companies that will settle" would protect.

the economic realities

As Micklethwait found, it is "simply mathematics": We import were worth $ 3 trillion every year and, thanks to the free trade, benefit from relatively affordable prices. Customs duties on all of these goods bring prices up and continue to drive inflation. This is not an obscure academic theory - the past seven years have clearly proven this.

The effects of Trump's customs policy

After Trump Zölle imposed on Chinese goods, President Joe Biden and Vice President Kamala Harris maintained these tariffs and even extended them to semiconductors, electric vehicles and other products to promote manufacturing and clean energy in the USA. American consumers have already borne almost the total costs of these tariffs to Chinese products, as various studies show.

future customs policy and their consequences

It is important to assess Trump's trade policy in his first term in office and the bid-harris herding in the context of the unprecedented customs wave, which Trump plans if he was to win a second term. The Republican candidate has accepted the tariff as the central measure of its economic agenda and promised to significantly increase the tariffs on goods from all over the world.

economists warn of the consequences

As Katie Lobosco reports, Trump plans to introduce new tariffs of up to 20% to all foreign imports in the United States in addition to the existing restrictions for China. In addition, he called for tariffs of over 60% to all Chinese imports and decided to impose a "100%" to countries that turn away from the US dollar. However, mainstream economists have concerns that he has lost an overview.

The economic burden on tariffs

"Economists agree to tariffs in certain contexts-for example in the event of national security," said Scott Lincicome, Vice President for General Economy at the Cato Institute. "There is a legitimate case that the United States - in order to clearly say it, a strong case - should by no means obtain their tanks and aircraft from China, and that tariffs can play a role here."

conclusion: the reality of the tariffs

The costs for tariffs are the main reason why economists reject them - they are inefficient and represent an unfair tax on poorer people who spend a larger part of their income for imported goods. The independent Peterson Institute for International Economics estimated the additional costs for a typical household with medium -sized incomes at over $ 2,600 a year. Trump's tariffs in combination with his plans to deport immigrants and undermine the interest rate decisions of the Federal Reserve would lead to an increase in inflation, slow down economic growth and reduce employment, according to the research of the Peterson Institute.

summarizing: Customs may be a nice word for Trump, but he tells an invented story about what they do in practice. The prices rise and the trading partners of America react with countermeasures. "It is a way of thinking like a two -year -old," said David Kelly, Chief Global Strategist at JPMorgan Asset Management. "You strike someone in the face and expect that he will not hit you back."