What will tariff taxes do to prices?
As part of his “Promises Made, Promises Kept” plan, when Donald Trump takes office in January, he plans to put a minimum 20% tariff tax on all products imported into the U. S. with as much as a 60% to 100% tariffs on products imported from China and other countries.
● Prices will go up on everything we buy that comes from another country! Trump acknowledges this.
Check the labels on the products you buy. How many of these are made in other countries?
Americans buy many imported products like bananas, coffee, and many other foods. We also buy children’s toys, clothes, and cars. Tariffs also raise the price of products assembled in the U.S. by our own manufacturing companies from parts that come from other countries. For example, China is a major supplier of parts for various industries, because of its large-scale manufacturing ability, cost advantages, and extensive supply chains. Medical devices, appliances, plumbing fixtures, furniture, and tools all fit into this category.
When prices go up because of tariff taxes, we buy less of the imported product, which hurts the economy of the exporting country. That’s why other countries get angry when we impose tariffs. Usually that country retaliates by putting tariff taxes on products they get from the U.S., which hurts our economy.
● That’s why money experts say that across-the-board tariffs, such as those being proposed, are self-defeating.
For example, in his last presidency, Trump imposed tariff taxes on Chinese imports, and China retaliated by imposing tariffs on U.S. farming products.
● The loss of the Chinese buying our farmers’ products hurt U.S. farmers so badly that farm bankruptcies increased 20%. Also, our government debt increased when the U.S. then had to pay out $23 Billion in subsidies to farmers from 2018-2020 to keep them going.
When are tariff taxes a problem?
● Tariffs raise prices: the cost of everything not made in the U.S. will go up.
● Tariffs hurt poor and middle-income people more than rich people.
● They reduce product choices available to U.S. customers.
● They cause other countries to put tariffs on U.S. products which creates international friction and takes away markets for our exports.
When are tariff taxes good?
● They generate income for the U.S. because that extra money goes into the U.S. Treasury.
● They protect U.S. producers from foreign competition. So called “protective tariffs” can be important to protect producers of items that are critical for national security.