Trump’s Tariff Plan: A Sales Tax Impacting Working-Class Families

Trump's proposed tariffs could act as a sales tax, harming working-class families and possibly sparking a trade war.
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Article Summary –

Economists criticize Trump’s universal tariff plan, warning it acts as a regressive sales tax, burdening the working class more than the wealthy. It risks trade wars and higher consumer costs, hurting US competitiveness and costing jobs, while promising manufacturing growth that experts doubt.


Trump’s Proposed Tariffs: A Sales Tax Burdening Working-Class Families and Risking Trade Wars, Economists Warn

With the Nov. 5 presidential election approaching, economists and tax experts voice concerns over Donald Trump’s sweeping tariff plans, predicting price hikes on imported goods that could weaken the US economy.

Trump, in his third presidential bid, has outlined a universal baseline tariff on US imports, potentially ranging from 10% to 20%, with a 60% tariff on imports from China, according to the Tax Foundation.

In a discussion with Bloomberg’s John Mickelthwait at the Economic Club of Chicago, Trump mentioned a 2,000% tariff on foreign vehicles, asserting it would reduce prices and boost US manufacturing jobs. However, experts argue this tariff would act like a sales tax, disproportionately affecting lower-income earners.

Mary Lovely, a senior fellow at the Peterson Institute for International Economics, highlighted the economic risks of Trump’s tariff plan. “This is the fastest way to erode US leadership and living standards,” she stated.

The Institute on Taxation and Economic Policy (ITEP) reports that 80% of Americans earning under $157,500 a year would pay an extra $2,872 annually due to these tariffs, affecting goods from food to smartphones. More details can be found in this report.

Experts predict Trump’s tariffs may cost the US 50,000 to 70,000 jobs monthly, and a University of Maryland study found that 68% of respondents prefer keeping low tariffs, with only 31% supporting Trump’s plan.

RELATED: Trump’s tariff plan could increase taxes for 95% of Americans, report finds

Francine Lipman, a tax policy expert at the University of Nevada, Las Vegas, compares tariffs to sales taxes, noting they burden lower-income groups more. “Tariffs take a larger income proportion from low- and middle-income families,” she explained.

Experts draw from Trump’s first term, where tariffs on countries like China increased consumer prices without benefiting US manufacturers. For example, a 20% tariff on Korean-made washing machines led to price hikes, even for US-made units.

Lovely warns that Trump’s tariff plan would harm US companies reliant on imported goods, especially from China, due to complex global supply chains. She doubts US companies would shift manufacturing back domestically.

Lipman pointed out potential economic impacts, like John Deere’s operations in Mexico facing high retaliatory tariffs. “Farmers need tractors, and supply limitations will drive prices up,” she said, highlighting potential retaliatory tariffs from other countries.

Such retaliations could destabilize global markets and conflict with US trade policies since World War II. Trump’s policies could push the US toward an isolationist economy, akin to the early 1900s before globalization.


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