Former President Donald Trump loved to impose tariffs on imported goods, even boasting about it and calling himself “Tariff Man.”
As Vox quoted him in 2018:
....I am a Tariff Man,” Trump wrote. “When people or countries come in to raid the great wealth of our Nation, I want them to pay for doing so.” He added that it would “always be the best way to max out our economic power” and that the US is “now taking in $billions in Tariffs.
There is so much wrong with this assertion it’s hard to know where to start.
The United States didn’t take in billions of dollars from other countries. U.S. companies and individuals paid the tariffs.
Trump never understood this point. When the federal government imposes a tariff, it’s U.S. individuals and companies importing the items that pay the tariffs, not the exporting countries.
How much have U.S. companies spent of Trump tariffs? The Tax Foundation writes, “The Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products, which is equivalent to one of the largest tax increases in decades.”
The Tax Foundation adds, “Based on 2021 import levels and country exemptions, the tariffs amounted to a $52.6 billion tax increase in 2021.”
Of course, Trump wasn’t president in 2021. President Biden has kept the tariffs because they help pay for his big-spending agenda and most Democrats and some Republicans have become mercantilists.
Yes, Trump signed the Republican tax reform legislation—the Tax Cuts and Jobs Act of 2017—that cut several taxes, especially the federal corporate income tax rate. That reform dramatically boosted the U.S. economy. But Trump unilaterally and arbitrarily raised tax rates—as much as 25 percent on steel—when he imposed his tariffs. And tariffs are perhaps the most insidious of taxes.
Most taxes are imposed to fund the cost of government. Tariffs may end up paying for the cost of government, but in modern times they’re imposed to keep Americans from buying the best products and services at the lowest price—if those products and services happen to come from the tariff-targeted countries.
And imposing tariffs usually results in the targeted countries reciprocating with their own tariffs. (A new report by the U.S. International Trade Commission identifies and tries to quantify these developments.)
Tariffs also prompt a flurry of efforts from affected U.S. companies and individuals, which either fight or try to be exempted from the tariffs. Those companies start making political donations to elected officials, hire high-powered lobbyists, and make multiple trips to Washington to plead their cases to bureaucrats, staffers, and members of Congress—often over very expensive dinners. All the things people hate about Washington.
Trump campaigned on draining the “Washington swamp.” His tariffs actually poured more water into the swamp.