Study from a left-leaning think tank reveals that Trump’s proposed 10% tariffs could result in a $1,500 tax increase for families

A new analysis found that former President Donald Trump’s proposal to apply 10% across-the-board tariffs would be akin to a $1,500 annual tax increase for the typical household.

The analysis, released by the left-of-center think tank Center for American Progress, found that Trump’s 10% tariffs would squeeze consumers because companies would pass the costs on to them. The tariffs would be like a $90 tax increase on food, a $90 tax increase on prescription drugs, and a $120 tax increase on oil and petroleum products.

“Donald Trump’s tariffs would crush America’s middle class by increasing the cost of everything, from food, fuel, clothing, and more, while failing to boost American manufacturing,” said Brendan Duke, senior director for Economic Policy at CAP Action. “Trump’s plans stand in stark contrast to President Joe Biden’s proposals, which would cut taxes for working families and continue the recent historic surge in the construction of American manufacturing facilities.”

Trump is at odds with many free-trade proponents in his party, although Republicans, led by Trump’s populist appeal, have increasingly become more open to tariffs. They see it as a way to reshore jobs and rebuild the country’s manufacturing base.

Trump floated the idea of 10% across-the-board tariffs last year. Such an aggressive move could be seen, at least in terms of trade policy, as a shift to the left of Biden, who hasn’t increased tariffs but has kept some of Trump’s tariffs in place. That is one reason why the CAP attack is worth noting.

But many in Trump’s party would undoubtedly call such a move foolhardy and inflationary. Brian Reidl, a budget expert at the conservative-leaning Manhattan Institute, told the Washington Examiner that it is “absolutely the case” that tariffs are a tax on U.S. consumers.

“Prices have already soared by 18% under President Biden. Tariffs just rise prices even higher,” he said. “To the extent that President Trump is running on a pro-tariff proposal, he is essentially wanting increasing inflation and raising taxes.”

The Tax Foundation, a nonpartisan group that generally prefers lower taxes, estimated that the Trump 10% tariff plan would shrink the U.S. economy by 1.1% and threaten more than 825,000 U.S. jobs if trade partners retaliated in kind.

Trump flexed his muscles on trade and tariffs during his first term in office and would be expected to maintain those policies if he were to be elected to a second term in November.

Former U.S. Trade Representative Robert Lighthizer, a protectionist and China hawk who served under Trump, said that he thinks the Republican Party’s Trump-era move away from free trade and big business is the new normal.

“The bottom line is the Republican Party — if it wasn’t apparent, it is now — is the party of working people,” Lighthizer said during an interview last year. “The party of big banks and big businesses is the Democratic Party.”

Trump has floated a number of policy ideas for a second term. One of Trump’s trade proposals is the passage of a law, the Reciprocal Trade Act, that would allow him to impose tariffs unilaterally of equal size to any tariffs placed by other countries on the U.S.

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The protectionist measures are billed by supporters as a means to narrow the trade deficit and support domestic manufacturing jobs. They’re also advertised as safeguarding the country’s supply chains, which, as the pandemic exposed, are often reliant on foreign nations for critical goods such as medicines and certain critical minerals.

But critics to both the right and left of Trump politically see them as an indirect tax on U.S. consumers at a time when the Federal Reserve is already struggling to drive down inflation by raising interest rates to their highest level in years.