Historical evidence and recent studies show that tariffs are taxes that raise prices and reduce available quantities of goods and services for US businesses and consumers, which results in lower income, reduced employment, and lower economic output. For example, the effects of higher steel prices, largely a result of the Bush administration’s 2002 US steel tariffs, led to a loss of nearly 200,000 jobs in the steel-consuming sector, a loss larger than the total employment in the steel-producing sector at the time. It’s also worth noting that measures of trade flows, such as the trade balance, are accounting identities and should not be misunderstood to be indicators of economic health.
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. Explore Trump’s latest trade actions with our Tariff Tracker.
President Trump’s 25 percent tariffs on Canada and Mexico is estimated to reduce long-run GDP by 0.2 percent, reduce hours worked by 223,000 full-time equivalent jobs, and reduce after-tax incomes by an average of 0.6 percent—before accounting for foreign retaliation.
26 min read
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
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
Are tariffs making everything more expensive? With Trump’s new tariff plans hitting $1.1 trillion in imports—far more than his first term—prices could rise for businesses and consumers alike.
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.
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
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
Using tariff policy to reallocate investment and jobs is a costly mistake—that’s a history lesson we should not forget.
6 min read
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
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
While the U.S. tariffs were intended to protect American industries, they have largely hurt the U.S. economy. Rather than pass on the tariffs to Chinese consumers, analysis shows that most U.S. firms simply bore the costs.
5 min read
As lawmakers today look for ways to boost American industry and reduce costs for consumers, they should pay attention to the mountains of evidence that the Trump-Biden tariffs have harmed American consumers and businesses.
6 min read
President Trump’s 25 percent tariffs on Canada and Mexico is estimated to reduce long-run GDP by 0.2 percent, reduce hours worked by 223,000 full-time equivalent jobs, and reduce after-tax incomes by an average of 0.6 percent—before accounting for foreign retaliation.
26 min read
The agreement represents a major change for tax competition, and many countries will be rethinking their tax policies for multinationals. If there is no agreement on changes to Pillar Two or digital services taxes, retaliatory American tariffs could be on the horizon.
8 min read
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
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
Are tariffs making everything more expensive? With Trump’s new tariff plans hitting $1.1 trillion in imports—far more than his first term—prices could rise for businesses and consumers alike.
As the third-largest economy in the world, with an influential voice within EU policymaking, and the United States among its most important trading partners, Germany’s next government will play a particularly important role in deciding the direction of European tax, trade, and transatlantic policy.
6 min read
What will the future of tax policy look like? In this episode, we dive into the critical challenges and opportunities looming on the horizon, especially with major tax cuts set to expire, which could increase taxes for 62 percent of filers.
Short FormThe holiday season is marked by time with friends and family, joy, and gift-giving. But could tax policy make the sticker shock from your shopping list next year tariff-ying?
4 min read
What happens to your taxes when the Tax Cuts and Jobs Act expires on January 1, 2026? In this episode, we explore the potential tax hikes facing millions of Americans and the debate over measuring the budgetary impacts of extending tax cuts.
Fiscal pressures are likely to weigh heavily on lawmakers as they craft a tax reform package. That increased pressure could result in well-designed tax reform that prioritizes economic growth, simplicity, and stability, or it could encourage budget gimmicks and economically harmful offsets. Lawmakers should avoid the latter.
8 min read
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
Join hosts Kyle Hulehan and Erica York in this episode of The Deduction as they break down the US tax policy implications of Donald Trump’s next presidential term.
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
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?
Broad, pro-investment tax policy matters for growth, and the US has plenty of opportunities to make improvements, particularly given the advantages our cross-Pacific rival confers on its firms.
5 min read
Trump’s tariff hikes would rank as the the largest tax increase outside of wartime since 1940. Meanwhile, Harris’s tax plan would rank as the 6th largest tax increase outside of wartime since 1940.
5 min read
Are tax increases on the horizon in 2025, no matter who takes office? In this episode, we explore why changes to the tax code could hit your wallet, regardless of which party comes out on top.
How does tax policy shape a nation’s competitiveness? Today, we’re diving into the showdown between the US and China, exploring how China’s enticing tax incentives pose a formidable challenge to America’s economic supremacy.
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
While federal tax collections—especially corporate taxes—have reached historically high levels, these gains have not kept pace with escalating spending, particularly on debt interest, leading to a substantial and concerning budget deficit in FY24.
6 min read