Trump — get this — still thinks imposition of tariffs, a tax on Americans, is responsible for job growth. In fact, like any tax, it costs jobs, as my colleague Aaron Blake pointed out. (“With the current GDP around $20 trillion, that amounts to about $40 billion. That’s less than the other estimates [Chris] Wallace brought up, but it’s still a hefty chunk of annual GDP growth — about 7 percent. If you lopped that off the GDP growth rate, you’d go from 3.2 percent to 3 percent.”)
Put differently, “The new 25% tariff, combined with earlier duties imposed on $50 billion in Chinese shipments and on steel and aluminum, would cut U.S. employment by 934,000 and cost the average family of four $767 a year, according to a study by the Trade Partnership.” That could very well gobble up all the money the family saved from the Republican tax cuts.
Only an ignoramus like Trump could conclude that enacting a trade tax (that’s what a tariff is) is a good thing. (Isn’t the entire Republican economic philosophy built on the notion that lower taxes promote job-creation and growth?)
Steven Rattner, former car czar, explains, “If Mr. Trump goes ahead with his threat to extend the 25% tariffs to all imports from China, the cost per family would rise to $2,294 per year. And as with any other tax increase, adding tariffs will slow the American economy and result in lost jobs — 900,000 from what Mr. Trump has already done and potentially, a total of 2.2 million if the levies are extended to all imports from China.” (Emphasis added.)
Imagine Republicans’ reaction if Democrats proposed a tax of $2,294 on American families, including working and middle-class families. In terms of everyday spending, Rattner points out that previous tariffs on South Korea placed on washing machines cost Americans “$1.5 billion — an extra $86 for each washing machine and $92 for each dryer.” That might not seem like a big deal to Trump and his billionaire Cabinet, but for regular Americans, it’s one more cost they didn’t anticipate.
Markets took a beating as well. Following large drops last week the Dow Jones industrial average fell more than 2.3 percent (more than 600 points) and the Nasdaq was off 3.4 percent. Trump likes to take credit for the stock market, which is hardly fair and politically stupid. However, the enormous losses certainly do belong to him and him alone. Trump won’t listen to aides, economists and business leaders who point out the dangers to the economy if the tariff war persists. No, Trump won’t be able to blame any of them nor the weakling Republicans who muttered about tariffs but refused to claw back tariff authority. This one is all on him.