Dive Brief:

• The 20% worldwide tariff and 60% tariff on imports from China as proposed by former President Donald Trump would increase the taxes paid by U.S. households next year by an average of nearly $3,000 and reduce imports by $9 trillion over 10 years, according to the Tax Policy Center.
• Another Trump proposal to impose a 200% levy on auto imports from Mexico would raise household taxes by an average of an additional $600, according to the TPC, a think tank of the Urban Institute and Brookings Institution.
• “Trump’s tariffs could significantly raise prices of imported goods since they’d mostly be passed on to U.S. consumers and businesses,” the TPC said. “That would shrink inflation-adjusted domestic incomes and income tax revenues.”

Dive Insight:

Trump last year announced his intent, if reelected, to set a blanket import tax. Since then several studies have indicated that the benefits would fall far short of the costs to U.S. households, productivity, economic growth, fiscal health and national security.

The Trump campaign on Tuesday pushed back against the criticism, noting that the Biden administration has not lifted many of Trump’s tariffs and citing recent comments by the former president.

“There are no tariffs,” Trump told the Chicago Economic Club on Oct. 15. “All you have to do is build your plant in the United States, and you don't have any tariffs.”

Blanket tariffs would create jobs and spur investment, he said. “The higher the tariff, the more likely it is that the company will come into the United States and build a factory in the United States so it doesn't have to pay the tariff.”

The TPC estimates of damage from broad tariffs do not account for retaliation by trading partners targeted by the Trump tariffs.

“However, experience suggests those countries would respond by raising tariffs on goods and services imported from the U.S., which would shrink demand for U.S.-made products and cost U.S. workers’ jobs,” the TPC said.

The 20% global tariff and 60% tariff on imports from China would generate about $6 trillion in new gross revenue beyond the $1 trillion expected to be raised through current tariffs, the TPC said.

Yet “it would also lower projected domestic incomes and produce much less total revenue after taking into account declines in corporate and individual income tax revenues,” the TPC said.

Prior studies have highlighted similar costs from across-the-board import levies.

A 10% tariff on all imports, as initially proposed by Trump, would impose annual costs on households ranging from $1,700 to $2,350 and erode income for the median worker by as much as 3%, the American Action Forum said in June.

An extra 60% tariff on imports from China would push up annual costs on U.S. households by $1,950, increasing consumer costs from $300 billion to more than $500 billion, AAF said in a study.

To Trump, the analysis is unpersuasive.

“I'm a believer in tariffs,” he said this month in Chicago.

“To me, the most beautiful word in the dictionary is tariff, and it's my favorite word,” he said. “It needs a public relations firm just to help it — but it's, to me — it's your most beautiful word.”