To Donald Trump, tariffs are simply a fantastic source of revenue for the government, for which he falsely claims foreign exporters into the American marketplace will pay. Yes, he actually apparently believes that.
At a recent rally in Arizona, Trump claimed that Vice President Kamala Harris lied when she referred to his tariff plan as a Trump Tax, even though that is precisely what a tariff imposed by Trump would be.
“She is a liar. She makes up crap … I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country,” Trump said.
In September last year, he repeated the claim during an interview with Fox News: “It’s not a tax on the middle class. It’s a tax on another country.”
He said again during a rally in Wisconsin that “it’s not going to be a cost to you; it’s going to be a cost to another country.”
This is serious stuff because it is patently untrue. It suggests that the former President has lost touch with reality or simply doesn’t understand tariffs.
To American consumers, tariffs are simply an added cost or indirect tax imposed on their purchases of imported goods by our own government. Trump’s claim that he will impose that tax on foreign companies is patently absurd. Foreign exporters to America DO NOT pay tariffs on the products they send to our country, as Trump claims. American importers pay the tariff at the point of entry when they take possession of those imported goods. Then, of course, that cost is built into those goods' prices when sold to American consumers. Trump’s proposed Tariffs are, in effect, American sales taxes that Americans and only Americans will pay. Trump doesn’t seem to understand that, or he purposely misstates it. His recent statements suggest he thinks foreign manufacturers (exporters) pay for the tariffs he would impose when their products are imported into the United States. No! Our government imposes 100% of the cost of tariffs on our citizens.
Trump, who calls himself “Tariff Man,” naively believes or disingenuously claims that foreign exporters bear the costs of tariffs, but every freshman economics student understands that American purchasers pay the costs of tariffs that are passed on to them when they purchase imported goods. The American consumer, sooner or later, pays one hundred cents on the dollar for Trump’s attractive source of revenue, a reality he ignores or, (let’s be honest) more likely, doesn’t understand.
Trump likes tariffs so much that he refers to himself as “Tariff Man,” which, of course, is just another way of saying “Tax Man.” American consumers should remember that Trump extolls the virtue of tariffs as though tariffs represent free revenue that other countries pay for the privilege of selling their goods in our country.
What nonsense! When an American company pays the cost imposed by a tariff on an imported product, it is because that cost has been imposed by our government on the purchaser. Trump ignores that reality, or more likely, simply doesn’t understand it himself.
Tariffs have an interesting history in America. For many years, land sales and tariffs on imported goods were simply the primary sources of the government’s revenue, accounting for about 90 percent of all revenue the country collected before the introduction of income taxes in the United States. America had no income tax until early in the twentieth century. From the founding until 1913, tariffs were essential to funding almost everything the government did. That, of course, changed with the introduction of the federal income tax. So now, Americans have the privilege of paying both income taxes and the tax on goods imposed by tariffs.
Trump believes that tariffs only impact companies that export into the United States, not American consumers who buy those imported products.
Listen to him.
“A tariff is a tax on a foreign country. That’s the way it is, whether you like it or not. It’s a tax on a country that’s ripping us off and stealing our jobs. And it’s a tax that doesn’t affect our country.”
Yes, he really said that. What nonsense!
First, tariffs are not a tax on a foreign country, as former President Trump maintains. Tariffs are paid in our country by purchasers of imported goods. They are nothing more than an indirect national sales tax paid by American consumers of the products on which a tariff has been imposed.
The billions of dollars Trump says tariffs will bring in will always be paid for by the American consumer. The Congressional Budget Office estimated tariffs reduced individual household income by about $1,300 in 2020. A recent Center for American Progress analysis found that a 10 percent tariff would impose an annual consumption tax increase of about $1,500 on American households. Trump’s assertions that foreign exporters, and not American consumers, ultimately pay for the cost of tariffs reflect breathtaking ignorance about how tariffs ultimately work. His promise of a 20 percent tariff on imported merchandise is nothing more than a 20 percent sales tax on American consumers of imported products.
Tariffs are also highly inflationary. Numerous studies have demonstrated that tariffs are generally priced into products when they are ultimately sold to American consumers. Domestic producers of goods know that their competitors who sell foreign-produced goods have to price in the cost of the tariffs they have to pay, so American producers have the added latitude to price their goods higher, and they frequently do.
When Trump proposes a 10 percent tariff on all products and materials imported from abroad and a 60 percent tariff on all imports from China, he says he would capture trillions of dollars of revenue for the United States. But actually, this is nonsense because he is, in effect, imposing a dollar-for-dollar increase on the cost Americans will pay for those goods. What he is proposing would turn out to be the largest indirect sales tax on American consumers in history. Trump obfuscates this fact or doesn’t understand it. This is serious because it strongly suggests that Trump is simply being disingenuous to the American public or that he doesn’t understand how tariffs work.
It bears repeating. No foreign exporter would incur a dime of cost for Trump’s tariffs. The American importer would pay for the tariffs he is proposing. Every dollar of tariff paid would come from the pockets of Americans.
It is almost embarrassing to listen to former President Trump wax inelegantly on tariffs. He has unwittingly called for a 10% tariff on all imported products and a 60% tariff on imports from China. He is campaigning on a promise to impose massive taxation on American consumers because Americans, and only Americans, will pay for the tariffs he seems determined to impose.
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The Trump Indictments,
The Fox Corp Settlement,
The CNN Trump Town Hall,
The Hunter Biden plea deal,
The New American Cult of Personality,
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Rikki Klieman, Attorney, Network News Analyst, and best-selling author;
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Katherine Gehl, co-author of The Politics Industry and founder of the Institute for Political Innovation,
Jazz artist Ann Hampton Callaway,
Outlander author Diana Gabaldon,
AI Data Scientist Lawrence Kite,
Ryan Clancy, Chief Strategist of No Labels,
Senator Barbara Boxer,
Senator Joe Lieberman,
and Maryland Governor Larry Hogan.
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I am not a tariff man but they can be used as a temporary or short term (2-4 years) to correct imbalances that have been built by poor American regulations and/or poor management by American companies. As much as I would like to believe in frees d fair competition that rewards the consumer I know that some countries subsidies prevent that. Their practices cause long term harm to us. Tariffs are one tool to encourage fair international competition and better domestic development where we have a strategic advantage, interest, and need.
Hal should have mentioned that Trump’s real purpose for the tariff is to prevent the purchase of foreign-made goods so that people or firms will buy domestically made goods. In this case, the American consumer is still paying the tariff at higher prices. The idea is to allow American companies to sell products at higher, non-competitive prices to “save jobs.”
I am not a tariff man but they can be used as a temporary or short term (2-4 years) to correct imbalances that have been built by poor American regulations and/or poor management by American companies. As much as I would like to believe in frees d fair competition that rewards the consumer I know that some countries subsidies prevent that. Their practices cause long term harm to us. Tariffs are one tool to encourage fair international competition and better domestic development where we have a strategic advantage, interest, and need.
Hal should have mentioned that Trump’s real purpose for the tariff is to prevent the purchase of foreign-made goods so that people or firms will buy domestically made goods. In this case, the American consumer is still paying the tariff at higher prices. The idea is to allow American companies to sell products at higher, non-competitive prices to “save jobs.”