Trump Threatens 35% Import Tax Which Would Be A Total Disaster

I know the new populist wing of the GOP likes the idea of threatening companies with an import tax, but Donald Trump’s threat to do it is one that would have an impact on the US economy and not in a right way. The very people Trump directs this at, are the ones who will be hurt most by its implementation.


Here is what President-elect Trump said:

Forget for a moment that Trump has goods bearing his name made in other countries such as China and Mexico, and look at instead, the impact his tariff would have on consumers. There is a lot of information out there but one important aspect to keep in mind is if the United States can impose tariffs on companies opening plants and factories overseas or across the border, those countries can do the same. In fact, they already did:


By 2009, the United States was importing tires from China at a rate of about 50 million per year. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union complained to the Obama administration that there was a “large, rapid, and continuing” increase in the number of Chinese-made tires entering American markets. In September of that year, Obama approved relief for domestic producers by increasing tariffs on most new tire imports for three years.

Economists Gary Clyde Hufbauer and Sean Lowry note that the number of Americans employed in tire manufacturing increased from 50,800 in September 2009 to 52,000 in September 2011. If all 1,200 jobs were attributed to the tariff — an exceedingly generous assumption — they calculate that Obama’s move could be credited with saving or creating $48 million of additional worker income and purchasing power.

But the tariff also forced consumers to spend $1.1 billion more on tires than they otherwise would have — or roughly $900,000 per U.S. tire industry job created. And retaliatory tariffs imposed by the Chinese further hurt our economy. In early 2010, China’s Ministry of Commerce imposed tariffs ranging from 50.3 to 105.4 percent on American poultry imports, which “reduced exports by $1 billion as U.S. poultry firms experienced a 90 percent collapse in their exports of chicken parts to China,” according to Hufbauer and Lowrr


In the end, such tariffs are always going to have adverse effects elsewhere. Ben Sasse tweeted the following:

His question is rhetorical, but he’s making a valid point. A tariff works like a tax but comes in the form of higher prices. The revenue generated gets split up between the government, the worker, and the companies that get protected from competition. So if you’re in Arizona and buy an air conditioner, some of that money will be handed over to workers in Indiana for example (and their corporate overlords). That air conditioner is going to cost a lot more than it did before just to preserve a job here or there.


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