Presidential candidate Donald Trump’s new trade war could cost middle-class families at least $1,700 a year, a shocking new report warns.
If he takes office later this year, the former president wants to reduce America’s dependence on income taxes — and instead plug the deficit by raising import tariffs.
Trump has advocated tariffs to help working Americans, but new research says the policy could hurt 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 report. paper published by the nonpartisan think tank the Peterson Institute for International Economics.
That is five times the cost of the trade war between the US and China that the former president started in 2018, it emerged.
Presidential candidate Donald Trump’s new trade war could cost middle-class families at least $1,700 a year, a new report warns
The presidential candidate is proposing a 60 percent tariff on all Chinese goods, and a 10 percent tariff on all US imports worth $3 trillion.
He also calls for an extension of the expiring tax cuts from 2017, while suggesting a possible new round of tax cuts.
“The rates would reduce after-tax incomes by 3.5 percent for those in the bottom half of the income distribution and would cost the average household in the middle of the income distribution about $1,700 annually in increased taxes,” the report said.
“If implemented, these steps would increase the disruptions and burdens caused by the rounds of tariffs imposed during the first Trump administration (and maintained during the Biden administration), while causing enormous collateral damage to the American economy.”
It argued that these policies will harm rather than help the lower- and middle-income Americans they claim to benefit.
The $1,700 tax burden on the typical American household is only the minimal possible impact, the report points out.
This estimate does not take into account possible further damage from foreign retaliation and lost competitiveness.
“This is the tip of the iceberg,” co-author Kimberly Clausing, a senior fellow at the Peterson Institute, told CNN.
‘The costs of retaliation will be very great. The Europeans will tax us. The Mexicans and Canadians will be very upset. People are not going to take it lying down,” she said.
The think tank analysis claims that tariffs on imported goods are “fully passed on to American buyers,” while Trump has suggested that other countries will pay for US tariffs.
The US International Trade Commission has in a study last year that U.S. importers bore “nearly the entire cost” of the tariffs.
The agency estimated that prices rose about 1 percent for every 1 percent increase in tariffs on Chinese goods, steel and aluminum, CNN reported.
“Contrary to Trump’s frequent and inaccurate claims that foreigners bear the consequences of tariffs, economists have long understood that tariffs burden domestic buyers of imported goods,” the Peterson Institute report said.
Former President Trump isn’t alone in embracing tariffs, however — with both parties showing support for the measure as a way to show they’re tough on China.
President Joe Biden has also kept in place many of the tariffs Trump implemented during his presidency.
The report says aggressive tariffs are more likely to harm than help working Americans
Trump’s aggressive trade proposals would cost consumers at least $500 billion a year, the report found
Biden has announced increased tariffs on electric vehicles from China
“President Biden, despite having ample opportunity to do so, has failed to eliminate tariffs on China imposed during the Trump presidency,” the Peterson Institute report said.
It noted that tensions with China may have made it difficult to roll back many of the tariffs, but they still hurt American households, albeit to a much lesser extent than Trump’s new proposals would.
Earlier this month, Biden announced increased tariffs on $18 billion of Chinese goods — including electric cars, critical minerals and solar products and batteries.
Karoline Leavitt, the Trump campaign’s national press secretary, told CNN in a statement: “The American people don’t need ‘paperwork’ from so-called ‘experts’ to know that Bidenomics has robbed them of thousands of hard-earned dollars, and they will have done. more money back in their pockets now that President Trump is back in the White House.”