Former President Donald Trump has signaled he would introduce new tariffs should he be elected president for a second term, but a new study by a left-leaning organization shows his tariffs would raise costs for American families.
Trump has given few details on his economic plans should he return to the White House, but he has said he would impose 10 percent tariffs on all imports.
A new analysis from the Center for American Progress Action Fund, which was founded by Democrats, found the tariff would amount to a roughly $1,500 annual tax increase for the typical U.S. household.
It would include a $90 tax increase on food, a $90 tax increase on prescription drugs and a $120 tax increase on oil and petroleum products.
The study found while the tax increases would drive up the price of goods, it would fail to significantly boost U.S. manufacturing and jobs.
‘We have a candidate who is proposing a 10 percent tax across the board on all U.S. imports, and we find that has a very large effect on the typical family’s cost of living,’ said Brendan Duke, who co-authored the analysis.
The estimates for increases come as the United States is already dealing with increased prices due to soaring inflation coming out of the coronavirus pandemic and higher interest rates as the Federal Reserve moved aggressively to combat inflation.
A new analysis finds Donald Trump’s proposed 10% tariffs on all imports would raise costs by $1,500 for households a year
Trump has proposed 10% tariffs on all imports and has said he is considering imposing 60% tariffs on Chinese goods
It estimates that Americans will import $3.2 trillion in goods next year, so a 10 percent tariff would effectively raise taxes on the goods by about $300 billion.
That would be an average of $1,700 per household in the first year. But when it looked at middle-income households which consume about 85 percent as much as the average household, according to Consumer Expenditure Surveys, it suggests a roughly $1,500 tax increase on the typical household.
For food, the tariffs would amount to a $90 tax increase the analysis found. 60 percent of fresh fruit to the U.S. is imported as are 38 percent of fresh vegetables. 70 to 85 percent of seafood is imported. And less than 1 percent of coffee is produced in the United State.
A tariff would also raise prices long term as U.S. farmers face greater costs to get supplies from abroad.
On top of increases for food, prescriptions and oil, it would include an $80 tax increase for electronics, $220 for automobiles, motorcycles and recreational boats, a $70 increase on clothing and a $50 increase furniture, kitchen appliances and other household items.
The largest category of impact are materials and equipment for American businesses which would see a $610 tax increase.
‘Services aren’t directly impacted by the tariff, but it does drive up their costs because the doctor is going to need equipment, they’re going to need office furniture, the building they’re in is going to require building materials,’ said Duke. ‘All of those costs go up and those eventually get passed on to the consumer.’
In an interview with CNBC in March, Trump said he is a ‘big believer’ in tariffs
Analysis found 10% tariff on all imports would result in a $90 tax increase on food, a $90 increase on prescription drugs and a $120 increase on oil and petroleum products a year.
Speaking CNBC earlier this month, Trump declared ‘I’m a big believer in tariffs.’
‘I fully believe in them economically when you’re being taken advantage of by other countries,’ the Republican presidential hopeful told Squawk Box in an interview.
The comments came after he first proposed the 10 percent tariffs on all imports last year.
‘When companies come in and they dump their products in the United States, they should pay, automatically, let’s say a 10 percent tax,’ Trump said at the time in a Fox Business interview. ‘I do like the 10 percent for everybody.’
Trump has argued tariffs take aim at China, but an across the board 10 percent tariff would not just impact imports from China.
While the U.S. does receive the largest amount of its imported goods from China, the country only supplies 16.5 percent of total goods imports, according to the office of the U.S. trade representative. Some other big importers are Mexico, Canada, Japan, and Germany.
Center for American Progress Action Fund was started by a number of Democrats including longtime Clinton family ally John Podesta, but other studies of the tariff proposal had suggested similar cost increases.
The Tax Foundation, a center-right organization, found a 10 percent tariff would raise taxes on Americans by more than $300 billion a year and warned if imposed, the tariffs would trigger retaliatory tax increases on U.S. exports.
It estimated a 10 percent tariff on imports would reduce the size of the economy by 0.7 percent and would eliminate more then half a million jobs.
Including retaliatory tax increases, the move would shrink the U.S. economy by 1.1% and threaten more than 825,000 jobs, the Tax Foundation estimated.
During his first term in office, Trump imposed a number of tariffs on China, Mexico and the European Union including a 25 percent tariff on steel and 10 percent tariff on aluminum.
In total, tariffs imposed during the Trump administration amounted to an $80 billion tax increase on $380 billion worth of imports, the Tax Foundation found.
The Biden administration kept most of those tariffs in place.
Separate from the 10 percent tariff proposal, Trump said last month he is considering a plan to impose tariffs of 60 percent or more on Chinese goods.
