As Donald Trump styles himself, the Tariff Man is ready to up the ante on border taxes if elected again to the White House. With the Biden administration keeping so many of Trump’s expensive, protectionist policies in place for four years and adding some of their own — and Vice President Harris giving us little reason to suspect that will change much — should consumers prepare for another dose of Washington-delivered inflation?
With promises of exports from China increasing and armed by the Trade Expansion Act of 1962, Trump now says his earlier 10 percent proposed tariffs for imported goods — 60 percent if those goods come from China — will go to 20 percent for run-of-the-mill countries. Now, it seems Canada has fallen in line, announcing its 100 percent tariffs on Chinese-produced EVs.
Taking another giant step, Trump suggests that the impossible could be possible, at least with him. He claims he might get enough tariff revenue to replace all income taxes. Those who run the numbers say otherwise. In 2023, U.S. imports totaled $3.1 trillion. That same year, federal income taxes — individual and corporate — raised $2 trillion. Tariffs large enough to conceptually extract $2 trillion from $3.1 trillion would wipe out the affected import purchases and generate, well, virtually nothing. It just can’t work.
Taking one more huge leap, Trump promises to “put a ring around the country” and use tariffs as a bargaining device to get what he wants from other countries. In his words, “If they want to have wars with somebody, we can say ‘No, if you do have wars, we’re going to raise your tariffs.’” If real, such a peace would be worth paying for, but let’s be clear: American consumers would be paying.
Many politicians refuse to accept findings from countless studies showing how the cost of tariffs, which include retaliation from affected countries, will always, partly, if not entirely, be carried on the backs of consumers. Just as sure as water runs downhill, higher prices cause people to buy less of the taxed good. This is precisely how tariffs deliver protection for domestic special interests who would prefer to see consumers pay a little more money and buy their own products.
Thanks to all the ways politics and the complexities of the economy can intersect and obscure things, it’s always been far too easy to deny or disbelieve such a commonsense fact. Asked about it recently, Trump responded, “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 that doesn’t affect our country.”
Go figure.
This is all part of why, with canny early recognition of the public’s weariness with globalism, Trump created what one study called “one of the largest and most abrupt changes in trade policy in U.S. trade history” while promoting a new spirit of nationalism. The change moved us further from the messy-but-appropriate wisdom provided by the uncoordinated buying decisions of hundreds of millions of American consumers and closer to a world where elected politicians decide what’s for sale and from whom. After all, this is America. Let “we the people” decide what is best for us.
Then, after replacing Trump, Biden kept Trump’s tariffs and piled on more. The Trump-Biden initiatives were targeted to maintain the support of union workers and decaying industrial communities and, in Biden’s case, to encourage more U.S. production of electric vehicles.
Our politicians are a modern Colossus of Rhodes standing athwart U.S. ports and determining who and what may enter. Trump relishes the role, but his rivals occupy it also. Instead of succumbing to presidential power, Congress should reassess the empowering Trade Expansion Act of 1962, sharply limit its use to things truly extraordinary and temporary, and return gatekeeping to ordinary Americans shopping in the marketplace.
In America, gatekeeping power belongs to you and me.