Donald Trump may consider tariff “the most beautiful word in the dictionary,” but voters might want to consider the impact his proposed tax increase on imports would have on their wallets and states’ economies.
Trump would have Americans believe that tariffs will pay for all his promises to voters — from paying down the national debt to footing the bill for family child-care costs to wiping out taxes on tips, overtime and Social Security benefits.
Don’t believe it.
Economists know what Trump refuses to tell you: Foreign governments do not pay tariffs. They are not absorbed by companies who take the loss. The cost of tariffs, to the largest extent possible, is passed on to the US consumers who purchase the goods. The Peterson Institute for International Economics, a nonpartisan research group, has estimated the higher end of Trump’s proposed tariffs would cost the average American household $2,600 annually.
To understand the damage such tariffs might have on the economy, look no further than the tariffs Trump imposed in 2018. Targeted places included China, Canada, Mexico and the European Union. After imposing a 25% tariff on steel, Trump noted glibly in a social media post that “trade wars are good and easy to win.”
According to the USDA Economic Research Service, the resulting trade war and retaliatory tariffs led to a $27 billion drop in US exports. Among the collateral damage were farmers in Illinois, Iowa, Kansas and Minnesota, who had made up 63% of those sales.
“It was disastrous,” said Louis Johnston, an economist and professor at the College of St. Benedict and St. John’s University in Minnesota. The Trump administration spent $12 billion in relief to bail the farmers out, Johnston said, “but some of those sales never came back.”
Americans got hit twice — paying higher costs for goods and footing the bill for relief to farmers. The Farm Bureau reported that bankruptcies rose to their highest level in a decade in Kansas and Minnesota. Farm Bureau Chief Economist John Newton noted that while the bankruptcies resulted from several factors, among them was “the second year of retaliatory tariffs on many US agricultural products.”
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