The costs of steep tariffs and a higher corporate income tax extend far beyond the advertised targets.
Former President Donald Trump wants to increase tariffs, while his Democratic opponent, Vice President Kamala Harris, wants to raise the corporate income tax rate. They say you need not worry about the consequences of these tax hikes because someone else will pay the tab.
Don’t believe them. Both proposals would impair economic growth and impose substantial costs on ordinary Americans, extending far beyond the advertised targets.
Last year, Trump proposed a « universal baseline tariff » of 10 percent, more than four times the 2023 trade-weighted average. More recently, he has pitched a general rate as high as 20 percent. He thinks Chinese imports should be subject to an even steeper tariff: 60 percent, maybe more.
When Trump set off a disastrous trade war by raising tariffs during his first term, he claimed the cost was borne by exporters. « China is bearing the entire burden of the tariffs », his top trade adviser averred in 2019.
Although tariffs are designed to raise the prices of imported components and finished goods, Trump is still pretending they do not hurt American businesses and consumers. Analyses of Trump’s tariffs tell a different story.
In 2020, for example, Pablo Fajgelbaum and three other economists reported that « U.S. consumers have borne the full incidence of U.
