Why it’s so hard to keep President Trump’s tariff promises: NPR

Donald Trump made another big promise on tariffs last week. This is the latest in a series of outsized promises to use tariffs to benefit the United States.

He declared on his social media platforms that he wants to create what he calls an “External Revenue Service” to collect customs duties and other revenues from foreign countries.

Let me be clear: the name itself is misleading. The overwhelming number of tariffs are paid by American companies that import goods, rather than by outside foreign sources.

The post is the latest in a series of promises President Trump has made regarding tariffs, a central part of his economic strategy. Economists say these tariff promises will be difficult to keep, and some may even work against each other.

Tariff Goals: Revenues, Jobs, and the War on Drugs

One of President Trump’s major tariff promises is to increase revenue. On the campaign trail, he told a crowd in Georgia: “We’re going to put hundreds of billions of dollars into our national treasury and use that money to benefit the American people.”

He also reiterated that tariffs will boost U.S. manufacturing. In the same speech in Georgia, President Trump said he would impose tariffs on Mexican-made cars. “We’re going to impose a 100% tariff on every car that comes across the Mexican border, and we’re going to tell them the only way to get rid of the tariffs is for you guys to build a factory here in the United States and operate it. That plant. ”

He also said at a recent news conference that tariffs could deter illegal immigration and drugs.

“Mexico must stop the flow of millions of people into our country,” he said. “We’re going to impose very tough tariffs on Mexico and Canada, because Canada is also coming through Canada, and the amount of drugs that are coming in is record amounts.”

These fee targets are beyond purpose

That’s wonderful. Simple tricks to deal with drugs, debt, and work. But it’s hard to understand how that can happen all at once.

“You can impose tariffs to raise revenue, you can impose tariffs to restrict them, but you can’t do both,” said Erica York, vice president of federal tax policy at the Tax Foundation, a right-wing economic think tank. I can’t do that.”

Tariffs provide some revenue because they are taxes that U.S. importers pay on goods from other countries.

However, President Trump also wants tariffs to revitalize manufacturing. The idea here is to make foreign cars more expensive, for example, so Americans don’t buy them.

A big contradiction arises here. If Americans buy fewer foreign cars, customs revenue will fall.

That’s not the only contradiction York sees in President Trump’s policies. If President Trump succeeds in threatening Mexico and Canada with tariffs and cracking down on immigration and drugs, that is, if Mexico and Canada change their policies to avoid imposing tariffs on President Trump, that is additional revenue. It means there is no. There are no additional protections for American workers.

“The incoming Trump administration is saying they can have their cake and eat it too, but that’s not really the case,” York said.

NPR asked the Trump campaign to explain how tariffs would accomplish all of the president’s goals. They did not provide specifics, saying the tariffs “protect American manufacturers and the men and women who work with them from the unfair practices of foreign companies and foreign markets.”

Price increases and revenue uncertainty

President Trump’s proposed tariffs go far beyond what he imposed during his first term. He proposed imposing additional tariffs of up to 60% on Chinese goods and 25% on Canada and Mexico. He has even proposed imposing a flat 10% to 20% tax on all imported goods.

But even higher new tariffs won’t generate the revenue President Trump hopes for. President Trump has frequently cited the 19th century, before the federal income tax, as an era he admires.

At a press conference in December, he praised the era of former President William McKinley, saying, “It will enrich our country.” “That was when we were proportionally the wealthiest,” Trump said.

Trump even suggested during the campaign that he wanted to replace income taxes with tariffs.

Experts say that’s not possible. Last year, tariffs accounted for just 2% of government revenue.

According to an analysis by the Peterson Institute for International Economics, the maximum revenue that Trump’s threatened tariffs could generate is $780 billion. This is equivalent to about one-third of total income and corporate tax revenues, and does not take into account the economic impact of higher tariffs, such as higher prices and slower growth, as well as retaliation from foreign countries.

Kimberly Clausing co-authored that analysis and also worked in the Biden Treasury Department. He emphasized that higher tariffs would hit lower-income Americans the hardest through higher prices, while also helping higher-income Americans who would benefit from President Trump’s proposed tax cuts.

“A cynical reading of what the Trump administration is suggesting is a series of regressive tax cuts meant to help those at the top, paid for by regressive sales taxes that hit the poor hardest. I think it means that we are being treated,” she said. Said.