Trump Tariffs: The Economic Impact of the Trump Trade War
The tariffs amount to an average tax increase of nearly $1,300 per US household in 2025.
32 min read
Featured Articles
The Truth About Tariffs—Fact-Checking Trump’s Trade Claims
Do tariffs really level the playing field, or are they just bad economics? In this emergency episode, we fact-check the Trump administration’s claims that retaliatory tariffs make trade fairer.
Trump’s Reciprocal Tariff Calculations Are Nonsense, Will Punish Mutually Beneficial Trade
Despite characterizing the tariffs as “reciprocal,” the White House didn’t actually measure tariffs, currency manipulation, or trade barrier policies employed by other countries. Instead, it drew its estimates from something else entirely: bilateral trade deficits in goods.
7 min read
Who Pays Tariffs? Americans Will Bear the Costs of the Next Trade War
Rather than hurting foreign exporters, the economic evidence shows American firms and consumers were hardest hit by tariffs imposed during President Trump’s first-term.
5 min read
Time (or Buying American) Won’t Erase the Economic Harm of Higher Tariffs
Contrary to the president’s promises, the tariffs will cause short-term pain and long-term pain, no matter the ways people and businesses change their behavior.
5 min read
How Will President Trump’s Tariffs Affect the Value of the Dollar?
President Trump has announced that new tariffs will go into effect on April 2, following several weeks of threats. These new tariffs are likely to be broader in scope than the limited ones implemented thus far. So who is likely to pay for them?
7 min read
Testimony: Alternatives to Tariffs to Boost US Competitiveness
While tariffs are often presented as tools to enhance US competitiveness, a long history of evidence and recent experience shows they lead to increased costs for consumers and unprotected producers and harmful retaliation, which outweighs the benefits afforded to protected industries.
Learning from the First Trade War: Retaliation Hurts US Exporters
As we learned in the first trade war, retaliation will exact harm on US exporters by lowering their export sales—and the US-imposed tariffs will directly harm exporters too. US-imposed tariffs can burden exporters by increasing input costs, which acts like a tax on exports.
4 min read
How Will Trump’s Universal and China Tariffs Impact the Economy?
President-elect Trump may want to impose tariffs to encourage investment and work, but his strategy will backfire. Tariffs will certainly create benefits for protected industries, but those benefits come at the expense of consumers and other industries throughout the economy.
5 min read
The European VAT is Not a Discriminatory Tax Against US Exports
The Trump administration appears to be moving in a “reciprocal” policy direction despite the significant negative economic consequences for American consumers of across-the-board tariffs on goods coming into the US. However, the EU’s VAT system should not be used as a justification for retaliatory tariffs.
6 min read
Donald Trump Tax Plan Ideas: Details and Analysis
We estimate Trump’s proposed tariffs and partial retaliation from all trading partners would together offset more than two-thirds of the long-run economic benefit of his proposed tax cuts.
12 min read
Trump’s Tariff Proposals Would Raise Tariff Rates to Great Depression-Era Levels
Using tariff policy to reallocate investment and jobs is a costly mistake—that’s a history lesson we should not forget.
6 min read
Revenue Estimates of Trump’s Universal Baseline Tariffs
Lawmakers will need to pursue fiscal responsibility as they address the tax law expirations, but fiscal responsibility requires finding sound ways to pay for spending priorities. Tariffs don’t make the cut.
4 min read
Why the Economic Effects of Taxes (Including Tariffs) Matter
Estimating the economic effects of different types of taxes informs policymakers about the trade-offs of raising revenue in a given way.
5 min read
2024 Election Insights | Can Trump’s Tariff Plan Really Replace the Income Tax?
Can tariffs truly replace income taxes in today’s economy? In this episode, we examine the bold and controversial proposal from former President Trump to replace income taxes with tariffs. What would this dramatic shift mean for everyday Americans, particularly those with lower incomes? And would it actually work?
All Related Articles
A Big-Picture Look at Taxing the Wealthy
Taxing wealth has become a hot-button issue in today’s political discourse, promising to reshape economic equality. But what are the real-world implications of such policies?
Five Things To Know About Trump’s Income Tax and Tariff Idea
Former President Trump floated the possibility of entirely replacing the federal income tax with new tariffs. He also raised other ideas like eliminating taxes on tipped income and lowering the corporate tax rate by one percentage point.
8 min read
Trump and Biden’s Tariff Tango
Tariffs are a hot topic this election cycle for both President Biden and former President Trump. But why are tariffs so popular despite their economic downsides?
How the Section 232 Tariffs on Steel and Aluminum Harmed the Economy
The Section 232 tariffs on imports of steel and aluminum raised the cost of production for manufacturers, reducing employment in those industries, raising prices for consumers, and hurting exports.
18 min read
Trade Tax Rates in Germany
Varying local trade tax rates impact business investment and local government revenue across Germany’s municipalities.
4 min read
So-Called Strategic Tariffs Are Still Tariffs—and Still Protectionist
Calling the latest round of tariffs “strategic” does not change the underlying reality: these policies are just another form of protectionism, and therefore, subject to all the same economic problems.
4 min read
Digital Services Taxes in Europe, 2024
About half of all European OECD countries have either announced, proposed, or implemented a DST. Because these taxes mainly impact U.S. companies and are thus perceived as discriminatory, the United States responded to the policies with retaliatory tariff threats, urging countries to abandon unilateral measures.
4 min read
Taxocracy Tales with Scott Hodge
All taxes tell a story, and today we’ll explore how taxes influenced Bob Dylan’s decision to sell his music catalog, how the “chicken tax” reshaped the auto industry, and how the historic “tax on air and light” had profound effects on architecture and living conditions.
Americans Are Still Paying for the Trump-Biden Tariffs
If reelected, President Trump would drastically escalate the trade war he started during his first term. But what often goes unnoticed is President Biden’s role in continuing Trump’s first trade war. In fact, more tax revenue from the trade war tariffs has been collected under Biden than under Trump.
5 min read
The Biden Administration’s Misguided Approach to Defining “American” Companies
What does it mean to be an American company?
4 min read
Tax Foundation Discussion on the Harms of Retaliatory Tax and Trade Policies
Historical evidence and recent studies have shown that retaliatory tax and trade proposals raise prices and reduce the quantity of goods and services available to U.S. businesses and consumers, resulting in lower incomes, reduced employment, and lower economic output.
5 min read
Tariff of Abominations Redux: Trump Proposes 60% Tariff on Chinese Goods
The Trump campaign is mulling a massive tax increase on American purchases from China. If reelected, he might quintuple the tax, imposing tariffs of 60 percent on imports from China. The economic ramifications would be significant and unwelcome.
5 min read
Is the Foreign Pollution Fee Act a Carbon Price?
A national-level carbon price—a tax or cap-and-trade scheme placed on CO2 or other greenhouse gases—may seem distant in the U.S., especially since the Inflation Reduction Act, which included major climate policy, omitted one. However, policymakers on both sides of the aisle have been nibbling around the edges of carbon taxes.
5 min read
Five Takeaways from the New Pillar One Documents
The OECD recently released a trove of new documents on a draft multilateral tax treaty. The U.S. Treasury has opened a 60-day consultation period for the proposal and is requesting public review and input.
7 min read
USITC Report Highlights Trade-Offs of Using Tariffs
The assessment of the tariffs President-elect Donald Trump imposed in 2018 and 2019 is clear: the policies have had a negative effect on American’s welfare.
4 min read
Blog
Short FormDebunking Myths about the Trade Deficit
Politicians often bemoan the trade deficit, but their disdain for this economic statistic is largely misplaced. The trade deficit reflects deeper choices about how we use our money, and reducing it may require lowering our standard of living.
4 min read
Trump’s Previous Tariffs Foreshadow the Economic Harm of Latest 10% Tariff Proposal
What can Former President Trump’s previous tariff efforts—specifically the safeguards he authorized on imported washing machines in 2018—tell us about his most recent proposal for a 10 percent tariff on all imports?
6 min read
Trump’s $300 Billion Tax Hike Would Threaten U.S. Businesses and Consumers
Former President Donald Trump’s proposed 10 percent tariff would raise taxes on American consumers by more than $300 billion a year—a tax increase rivaling the ones proposed by President Biden.
4 min read
Global Tax Tug of War: Comparing the UN and OECD Approaches
The United Nations (UN) is preparing to flex its muscles on international tax policy. Several developing countries say the OECD’s approach favors richer countries at their expense, and the UN hopes to fix this.
5 min read
Another Digital Services Tax in Sight
Canada is planning to join the club of countries that, in the past 3 years, introduced a digital services tax (DST) despite U.S. opposition and concerns expressed by Canadian businesses.
4 min read