Just as Smokey the Bear told Americans in the 1940s “Only you can stop a forest fire,” someone needs to tell Americans today “Only you can pay for tariffs.”
American consumers and businesses purchase imported products. As a result, they will be the ones to pay the unfathomable tariffs President Donald Trump is threatening the world with — like the proposed 10% tariff on all imports and 25% tariff on Canada and Mexico.
Unlike what Trump is claiming, tariffs will not bring economic prosperity; they will create trade barriers, increase the taxes U.S. citizens pay annually and dramatically increase inflation. This is the perfect recipe for widespread economic chaos, and Trump knows it.
Tariffs create trade barriers since they discourage international trade by hiking up the prices of foreign goods. They also trigger retaliatory tariffs, which decrease the competitiveness of domestic goods in foreign markets. Global trade has enabled many countries to specialize in specific sectors and thrive economically. A country imposing such substantial tariffs is shooting itself in the foot and setting itself back by decades.
Tariffs are inherently regressive, meaning low-income households end up paying a higher percentage of their income than high-income people. Should Trump go through with his threats of sweeping tariffs, American households may end up paying at least $1,200 more annually in taxes. But Trump does not care about low-income Americans, as seen in his Tax Cuts and Jobs Act from 2017. It resulted in a tax cut of over $48,000 for households in the top 1% and a whopping $600 for those in the bottom 60%, the ones who would suffer the most under the tariffs.
Typically, a tariff or two is not enough to have a meaningful impact on inflation since it is too focused on one product or industry. However, Trump’s tariffs would affect every single industry from how all-encompassing and steep he says they will be. Everything from agricultural products to raw materials — like lumber, minerals, metals and gasoline — are expected to increase in price for American consumers. The tariffs could bring great disruption to the supply chain and inhibit the Federal Reserve’s ability to stabilize prices and control inflation.
Trump is holding the American economy hostage, and he is using it as a bargaining chip to get what he wants from other countries. Had he gone through with the 25% tariffs on imports from Canada and Mexico, Trump could have sent their economies into a recession and wreaked havoc on ours. For now, the tariffs on Canada and Mexico have been pushed back until March 1, but only because the nations folded to Trump’s demands. He is well aware of what he is doing, and he knows no one out there has the audacity to stop him.
