US President Donald Trump is expected to raise tariffs on imports, with rates potentially higher than the current 2.4 percent average rate. The motivation behind these hikes is not just about trade, but also about funding his proposed tax cuts. Trump believes that tariffs will make up for the costs of these cuts and punish countries that have taken advantage of the US.
However, economists argue that this strategy doesn’t add up mathematically. Extending existing tax cuts for another decade would cost $5 trillion, while Trump’s tariff plan could raise around $2.7 trillion over a decade. But who will bear the brunt of these tariffs? According to The Tax Foundation, households with lower incomes will lose out more than they gain from reduced taxes.
Business leaders are urging Trump to reconsider his plans, but it appears he is determined to proceed. In contrast, ordinary Americans are taking Trump’s words seriously, stockpiling goods and anticipating higher prices due to the tariffs. Main Street is worried that Trump’s plan will make China look like a more stable option in comparison.
Historically, targeted tariffs have led to better outcomes, such as Ronald Reagan’s quotas on Japanese cars in the 1980s. But by applying tariffs across the board, Trump risks losing the trade war with China and alienating allies who may retaliate against US goods. Instead of being a champion of global stability, Trump’s actions could make America look more chaotic.
Source: https://www.washingtonpost.com/opinions/2025/01/09/trump-tariff-war-china-denmark-canada