President Trump has relentlessly blamed foreign countries for much of what ails Americans. Trade imbalances, fentanyl overdoses and the economic struggles of working class Americans are all laid at the feet of foreign governments.
According to that logic, tariffs are the ideal policy instrument for extracting concessions from foreign governments to remedy those harms, while also raising money for America’s treasury. Of course, there is an inherent conflict between these two goals: If foreign governments make the requisite changes, and Mr. Trump drops the tariffs, they will raise no revenue. And yet, the president pushes ahead, seemingly unconcerned by warnings of the damage tariffs will cause; some observers dismiss the threats as mere bluster or a negotiating tactic.
A better way to think about tariffs is as a key tool to achieve the core of Mr. Trump’s economic agenda: He wants to shift the tax burden away from the well-off and toward the poor and middle class — while also consolidating his power.
The signature legislative achievement of Mr. Trump’s first term was the Tax Cuts and Jobs Act, legislation which permanently lowered the corporate tax rate by 14 percentage points, alongside temporary tax cut provisions that expire at the end of 2025. Extending these provisions would provide most Americans with only a small tax cut relative to current law, but it would disproportionately benefit those at the top. An analysis by the Tax Policy Center, a nonpartisan research group, shows that the top 1 percent would save more than $70,000, about 3 percent of after-tax income, while the median household would get only about $1,000, about 1 percent of after-tax income.
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While the poor get few of the rewards from those tax cuts, they bear more of the burden from tariffs, which are a tax on imported goods. The poor spend a larger share of their income than the rich do on things they want or need, including on imported goods, rather than saving or investing it, so tariffs operate as a sharply regressive tax.
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It is a mistake to imagine that the imports subject to tariffs are luxury goods like fine wines or sports cars; the tariffs threatened so far would fall instead on everyday household goods made in China, Canada and Mexico, along with steel and aluminum, which are used in a vast array of things Americans buy. It’s not yet clear what the final level of tariffs will be, but the highest levels Mr. Trump proposed during the campaign — a 20 percent across-the-board tariff, combined with a 60 percent tariff on China — would cost a typical American household in the middle of the income distribution more than $2,600 a year.
If a candidate announced a tax increase on the poor and middle class to fund a tax cut for the rich, voters would soundly reject that proposal. But tariffs wrap this fiscal switch in a veneer of nationalism.
According to that logic, tariffs are the ideal policy instrument for extracting concessions from foreign governments to remedy those harms, while also raising money for America’s treasury. Of course, there is an inherent conflict between these two goals: If foreign governments make the requisite changes, and Mr. Trump drops the tariffs, they will raise no revenue. And yet, the president pushes ahead, seemingly unconcerned by warnings of the damage tariffs will cause; some observers dismiss the threats as mere bluster or a negotiating tactic.
A better way to think about tariffs is as a key tool to achieve the core of Mr. Trump’s economic agenda: He wants to shift the tax burden away from the well-off and toward the poor and middle class — while also consolidating his power.
The signature legislative achievement of Mr. Trump’s first term was the Tax Cuts and Jobs Act, legislation which permanently lowered the corporate tax rate by 14 percentage points, alongside temporary tax cut provisions that expire at the end of 2025. Extending these provisions would provide most Americans with only a small tax cut relative to current law, but it would disproportionately benefit those at the top. An analysis by the Tax Policy Center, a nonpartisan research group, shows that the top 1 percent would save more than $70,000, about 3 percent of after-tax income, while the median household would get only about $1,000, about 1 percent of after-tax income.
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While the poor get few of the rewards from those tax cuts, they bear more of the burden from tariffs, which are a tax on imported goods. The poor spend a larger share of their income than the rich do on things they want or need, including on imported goods, rather than saving or investing it, so tariffs operate as a sharply regressive tax.
Sign up for the Opinion Today newsletter Get expert analysis of the news and a guide to the big ideas shaping the world every weekday morning. Get it sent to your inbox.
It is a mistake to imagine that the imports subject to tariffs are luxury goods like fine wines or sports cars; the tariffs threatened so far would fall instead on everyday household goods made in China, Canada and Mexico, along with steel and aluminum, which are used in a vast array of things Americans buy. It’s not yet clear what the final level of tariffs will be, but the highest levels Mr. Trump proposed during the campaign — a 20 percent across-the-board tariff, combined with a 60 percent tariff on China — would cost a typical American household in the middle of the income distribution more than $2,600 a year.
If a candidate announced a tax increase on the poor and middle class to fund a tax cut for the rich, voters would soundly reject that proposal. But tariffs wrap this fiscal switch in a veneer of nationalism.
