Trump economic policies would cost middle-class families $1,700 a year, report finds

Former President Donald Trump’s proposal to impose a 10% tariff on all imported goods would cost middle-class families $1,700 a year and inflict “significant collateral damage on the U.S. economy,” according to a new paper published by the Peterson Institute for International Economics think tank on May 20.

Last August, the Washington Post reported that Trump had convened his former economic advisers and come up with a proposed 10% “universal baseline tariff” on all goods imported into the United States in an effort to boost domestic production. 

However, the PIIE report said that raising tariffs would instead lead to higher costs for consumers because businesses that buy imported goods would pass the costs added by the tariffs down in the form of higher prices. 

In the report, titled “Why Trump’s Tariff Proposals Would Harm Working Americans,” PIIE senior fellows Kimberly Clausing and Mary Lovely write: “Both the tariffs and candidate Trump’s tax proposals entail sharply regressive tax policy changes, shifting tax burdens away from the well-off and toward lower-income members of society. … These policies are more likely to hurt than help the lower- and middle-income Americans they purport to benefit.”

PIIE’s findings closely mirror those of the Center for American Progress, which in a March analysis found that Trump’s proposed tariffs would cost Americans $1,500 per year.

“This tax increase would drive up the price of goods while failing to significantly boost U.S. manufacturing and jobs,” the CAP analysis found. 

A Moody’s analysis from 2018 found that tariffs Trump placed on China while in office caused the consumer prices of some imported goods to increase: The price of laundry equipment in the United States rose by 18% after Trump instituted tariffs, for example. 

The PIIE paper says tariffs should be scrapped altogether.

“Tariffs are a regressive and distortionary source of public finance, and they do not help the groups they are intended to help,” the authors wrote. “They instead introduce new economic inefficiencies and collateral damage, and they make it more difficult to work cooperatively with allies and partners to solve our most vexing international problems.”