Center for American Progress Action

RELEASE: Comparing Trump’s Haphazard $2,500 Tax Increase to Biden’s Targeted Tariffs

RELEASE: Comparing Trump’s Haphazard $2,500 Tax Increase to Biden’s Targeted Tariffs

Washington, D.C. — Both President Joe Biden and former President Donald Trump have touted trade policy proposals they say will help rebuild the country’s industrial base. But the difference between their approaches—and manufacturing job creation records—could not be clearer. A new CAP Action column builds on a previous analysis of Trump’s tariff policy and reveals how damaging his proposals will be for the U.S. economy.  

The analysis finds:

  • The combination of Trump’s 10 percent tax on all imports and a 60 percent tax on all imports from China would effectively raise taxes for a typical family by $2,500 each year. This includes a $260 tax on electronics, $160 tax on clothing, a $120 tax on oil, and $110 tax on food. 
  • The tax revenue from Trump’s taxes on imports would help finance Trump’s proposals to extend his expiring tax cuts. This would cut taxes for the wealthy while raising taxes for everyone else: The net tax cut for the top 0.1 percent of Americans would be $325,000 while a middle-income family would receive a net tax increase of $1,600, even after extending the expiring 2017 tax cuts.
  • Trump’s tariff proposals would create a one-time inflationary burst that could add up to 2.5 percentage points to the inflation rate according to Wall Street analysts. 
  • Trump’s latest idea to replace all income taxes with tariffs is mathematically impossible, but even if it were feasible, it would dramatically increase income inequality and raise taxes for the bottom 90 percent of households. It would raise taxes for middle-income households by $5,100 to $8,300 while cutting taxes for the top 0.1 percent by at least $1.5 million annually.

“President Biden’s combination of strategic tariffs and investments in manufacturing is leading to an industrial renaissance, creating good paying jobs for Americans across the country,” said Ryan Muholland, senior fellow for international economic policy at CAP and co-author of the column. “The administration’s strategy is creating quality jobs in states across the country and demonstrates what is possible when all the tools for boosting American competitiveness are employed together, including national investment, regulation, procurement, and trade.”

“Trump is doubling down on the brash, imprecise approach from his first term that sullied alliances and delivered little in terms of new manufacturing or job creation,” said Brendan Duke, senior director for economic policy at CAP and co-author of the column. “But this time, Trump’s plan would rely on far larger and even less targeted tariffs that would raise taxes for families and contribute to inflation.”

Read the column: “Comparing Trump’s Haphazard $2,500 Tax Increase to Biden’s Targeted Tariffs” by Ryan Muholland and Brendan Duke

For more information or to speak with an expert, please contact Colin Seeberger at [email protected] 

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