During his first term as President of the United States, Donald Trump implemented a series of tariffs, predominantly aimed at China. Over five years ago on X (formerly known as Twitter), he called himself the “tariff man.” Now, as President-Elect, he continues to uphold his self-given moniker with promises of increasing these tariffs.
A tariff is a tax on products or produce imported into another country. In 2019, Trump increased tariffs on solar panels, steel, aluminum, and washing machines, stating that this would protect American industries. This ordeal successfully created new jobs for the steel industry, but this was short-term, and according to a study by the National Bureau of Economic Research, led to higher prices for these goods. As a result of the tariff, the US government gained $79 billion, double the amount from two years prior. In tandem, Trump appointed new purposes to the tariffs, such as pressuring China into a trade deal and, as he stated at a campaign rally in Raleigh, North Carolina, on November 4th, “if they [Mexico] don’t stop this onslaught of criminals and drugs coming into our country, I’m going to immediately impose a 25 percent tariff on everything they send into the United States of America.”
During this year’s election, Trump expressed intent to create and raise tariffs as well as expanding them across other industries, this time with declarations of improved jobs, decreased inflation, assistance with pay for childcare, and an increase of the U.S. government’s revenue to replenish the revenue that will be lost due to the income taxes he promises to cut; a plan senior economist and research director Erica York referred to as “mathematically impossible.” Economists expect these tariffs will create a large economic recession.
Based on an analysis from economic researchers at the Peterson Institute for International Economics on Bureau of Labor Statistics Consumer Expenditure Surveys, American households paid from a couple hundred to about a thousand dollars or more per year on household goods due to tariffs. The institute maintains that domestic companies will be forced to raise their prices on consumers to account for the tax. While economists disagree that Trump’s tariffs will meet his goals, they do agree that the middle and lower classes will take a severe hit. According to senior economist Erica York’s report on the economic impact of Trump’s tariffs, contrary to Trump’s goal to lower inflation, tariffs introduced by the Trump Administration, and continued by the Biden Administration have and will continue to raise prices for everyday consumers.
A study by researchers at Harvard University and the University of Chicago found that Businesses in America struggle with passing tariff costs to Chinese importers. At a Wisconsin rally in September, Trump stated, “You leave the dollar and you’re not doing business with the United States, because we are going to put a 100 percent tariff on your goods.” The Harvard and University of Chicago researchers believe that if this 100% tariff is put into motion, American businesses, industries, and consumers may end up in a more susceptible position, especially if retaliatory actions are invoked by the Chinese government.
Since products that the United States provides to China can be found in other places, an easy switch can be made to different exporters outside of the United States. According to data from Trade Data Monitoring, China has been switching to different suppliers since 2018. The biggest example is Brazil, which overtook the United States as China’s top agricultural supplier. Economist Erica York writes that economists expect the Chinese government will set additional taxes on goods imported from the United States, purely to make American products more expensive and less appealing to Chinese consumers. The demand for American products would therefore be reduced and, as a result, the exports lessened.
2024 Nobel Prize winner Daron Acemoglu, among 22 other Nobel prize-winning economists, signed a letter stating that Trump’s plans would “lead to higher prices, larger deficits, and greater inequality.” Trump creates the possibility of a tenuous trade connection between China and the United States that may falter along with the economy, and as former US representatives Charlie Dent and Dan Glickman express on The Hill, cause an economic recession almost as bad as the Great Depression.
