President Trump continues to mischaracterize his tariffs and their effect on the Treasury, taxpayers, and farmers. He completely misrepresented it all again in an interview he gave my colleague Salena Zito in Pennsylvania yesterday.
Asked about how to hold China “accountable for the coronavirus,” Trump didn’t come close to answering that question but instead went off on this fact-challenged tangent:
This is pure tommyrot.
It doesn’t take complicated numbers or statistical analysis to show this is wrong. It’s just wrong. When the United States puts tariffs on goods coming in from other nations, the money for the tariffs themselves is not paid by the exporter; it is paid by the importer. The people who buy the goods from the Chinese pay the tariff to the U.S. Treasury, then either eat the extra cost themselves or pass it to U.S. consumers. This might hurt the other nations indirectly but only because it makes their goods (and consequently all competing goods) more expensive for U.S. consumers.
Moreover, when U.S. importers’ profits are slashed by tariffs, they pay less to the Treasury on the back-end in corporate income taxes, capital gains taxes, and the like. The net gain to the U.S. Treasury is thus far less than the gross amount brought in directly by the tariffs.
Meanwhile, even that smaller gain to the Treasury is illusory. As Trump noted, his policy has been to send those proceeds right back out again to U.S. farmers. The net gain to the Treasury is therefore nil.
And in the end, not even the farmers are better off. The way Trump describes it, the $9 billion or $12 billion sounds as if it is some sort of bonus to farmers. But as the U.S. Department of Agriculture itself describes it, the payments are “aimed at assisting farmers suffering from damage due to unjustified trade retaliation by foreign nations.” The tariffs were threatening to put farmers out of business, so the subsidies were introduced as a lifeline. Think of it this way: The tariffs forced farmers into a COVID-19 situation before the plague even existed.
To make a long story short, tariffs are a losing proposition for everyone. Nobody, absolutely nobody, wins at all.
