On This Terrible Idea, Trump And Biden Are Completely Aligned

There is one area where our fractious political class agrees: They are keen to make consumers pay more for just about everything.

In this case, it’s making people pay through tariffs on imported goods. Both the Biden and Trump administrations have used tariffs as a means of rewarding friends and punishing foes. It’s rarely said that way – the usual protectionist line is the government is protecting jobs/economic security/whatever.

Out on the campaign trail, Donald Trump floated the idea of imposing a universal 10 percent tariff on imports:

“I think we should have a ring around the collar” of the U.S. economy, Trump said in an interview with Kudlow on Fox Business…. “When companies come in and they dump their products in the United States, they should pay, automatically, let’s say a 10 percent tax … I do like the 10 percent for everybody.”

Here’s the thing about Trump’s suggestion: It’s not the companies or the countries who pay the tariffs. It’s the people who buy the imports at inflated prices.

As Dan Mitchell writes, it’s exactly the same sort of wealth extraction as a massive tax hike:

…it goes without saying that I’m going to be very critical now that President Trump is floating a massive tax increase (also potentially amounting to about $3 trillion over 10 years) on American consumers.

And it does not matter that Trump’s potential tax increase is on trade. His proposal is bad news (just like Biden’s tax increase is bad news) because the net effect would be to divert trillions of dollars from the private economy and give it to politicians.

That’s another thing about tariffs: The money doesn’t go to some sort of fund where we can all share in the take. It goes to the government, which only reinforces the idea that Trump, like Biden, is all-in on a tax increase to fund more and bigger government.

And lest anyone think Mr. Biden’s affinity for tariffs is somehow any better…it’s not. If anything, it runs counter to just about everything Democrats used to stand for. As the Tax Foundation notes:

The distributional effects of a tariff (the economic burden it places on households across income levels) tend to be regressive, burdening lower-income households more than higher-income households.

Tariffs are taken out of business revenue before it is distributed as compensation to factor inputs (workers and capital). This creates a wedge between what workers and capital produce and the amount they receive; in other words, a wedge between the consumer price and the producer price.

Tariffs ultimately fall on the factors of production and reduce taxpayer labor and capital income.  This occurs either by raising prices or reducing wage and capital income. Tariffs tend to be regressive because the average shares of income sources burdened by tariffs are higher for lower-income taxpayers.

Hmm. Regressive, job-killing, income destroying…it would very much appear that the leading presidential candidates of the two major parties are both bent on ruining the very voters they say they care about most.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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