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center for economic and policy research
'Batsh*t Crazy' Trump Tariffs Should Be Seen as $7,000 Tax Hike on Workers, Says Economist
Instead of strategically imposing tariffs, Trump has chosen to "give the country the most massive tax increase in its history, possibly exceeding $1 trillion on an annual basis."
Apr 03, 2025
As stocks "nosedived" on Thursday, economists, policymakers, and campaigners around the world continued to warn about the impacts of U.S. President Donald Trump's trade war, which includes a 10% universal tariff for imports and steeper duties—that he claims are "reciprocal"—for dozens of countries, set to take effect over the next week.
"This is how you sabotage the world's economic engine while claiming to supercharge it," wrote Nigel Green, CEO of the international financial consultancy deVere Group. "Trump is blowing up the post-war system that made the U.S. and the world more prosperous, and he's doing it with reckless confidence."
As Bloombergdetailed after the president's "Liberation Day" remarks from the White House Rose Garden:
China's cumulative tariff rate of 54% includes both the 20% duty already charged earlier this year, added to the 34% levy calculated as part of Trump's so-called reciprocal plan, according to people familiar with the matter. The European Union's rate is 20% and Vietnam's is 46%, White House documents showed. Other nations slapped with larger tariffs include Japan with 24%, South Korea with 25%, India with 26%, Cambodia with 49%, and Taiwan with 32%.
In Europe on Thursday, "the regional Stoxx 600 index provisionally ended down around 2.7%," while "the U.K.'s FTSE 100 was down 1.6%, with France's CAC 40 and Germany's DAX posting deeper losses of 3.3% and 3.1%, respectively," according toCNBC.
In the United States, CNBCreported, "the broad market index dropped 4%, putting it on track for its worst day since September 2022. The Dow Jones Industrial Average tumbled 1,200 points, or 3%, while the Nasdaq Composite fell 5%. The slide across equities was broad, with decliners at the New York Stock Exchange outnumbering advancers by 6-to-1."
American exceptionalism.
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— Justin Wolfers ( @justinwolfers.bsky.social) April 3, 2025 at 12:14 PM
However, as Economic Policy Institute (EPI) chief economist Josh Bivens noted last week, "because most households depend overwhelmingly on wages from work as their primary source of income and not returns from wealth-holding, the stock market tells us nothing about these households' economic situations."
And Trump's tariffs are expected to hit U.S. households hard, as the cost of his taxes on imports are passed on to consumers.
"Tariffs can be a legitimate and useful tool in industrial policy for well-defined strategic goals, but broad-based tariffs that significantly raise the average effective tariff rate in the United States are unwise," Bivens and EPI senior economist Adam Hersh stressed in a Thursday statement—which also called out Trump for mischaracterizing one of the think tank's 2022 analyses.
"Further, the second Trump administration's rationale, parameters, and timeline for tariffs have been ever-shifting," Bivens and Hersh continued. "As the original post cited by the administration argues, tariffs should not be a goal unto themselves, but a strategic tool to pair with other efforts to restore American competitiveness in narrowly targeted industrial sectors."
Instead of strategically imposing tariffs, Trump has chosen to "give the country the most massive tax increase in its history, possibly exceeding $1 trillion on an annual basis, which comes to $7,000 per household," warned Center for Economic and Policy Research co-founder and senior economist Dean Baker. "And this tax hike will primarily hit moderate and middle-income families. Trump's taxes go easy on the rich, who spend a smaller share of their income on imported goods."
Baker—like various other economists and journalists—also took aim at Trump's claims that the tariffs are reciprocal, explaining:
Trump's team calculated our trade deficit with each country and divided it by their exports to the United States. Trump decided that this figure was equal to that country's tariff on goods imported from the U.S.
Trump's method of calculating tariffs is comparable to the doctor who assesses your proper weight by dividing your height by your birthday. Any doctor who did this is clearly batshit crazy, and unfortunately so is our president. And apparently none of his economic advisers has the courage and integrity to set him straight or to resign.
However, outside Trump's administration, the intense criticism continued to mount, including from groups focused on combating the fossil fuel-driven climate emergency, which also endangers the global economy.
Andreas Sieber, associate director of policy and Campaigns at 350.org, said Thursday that "Trump's tariffs won't slow the global energy transition—they'll only hurt ordinary people, particularly Americans."
"Despite his claims he 'gets' economic policy, his record tells a different story: Tariffs are tanking U.S. stocks and fueling inflation," Sieber added. "The transition to renewables is unstoppable, with or without him. His latest move does little to impact the booming clean energy market but will isolate the U.S. and drive up costs for American consumers."
Allie Rosenbluth, U.S. campaign manager at Oil Change International, similarly emphasized that "Trump's tariffs will hurt working families first and foremost, raising costs for essentials we depend on and threatening to plunge the U.S. economy into a recession. Though Trump pretends to care about the cost of living for ordinary people, his real loyalties lie with his fossil fuel industry donors."
"If he actually cared about energy affordability, he would stop bullying other countries into buying more U.S. liquefied natural gas (LNG), which boosts the fossil fuel industry's profits, but results in increased prices for domestic consumers and pushes us further toward climate catastrophe," she asserted. "The one step countries can take to hit Trump where it hurts most is wean off their dependency on fossil fuels from the United States."
The impact of Trump's new levies won't be limited to working-class people in the United States. Nick Dearden, director of U.K.-based Global Justice Now, pointed out that "Trump has set light to the global economy and unleashed a world of pain, not least on a group of developing countries that will suffer tremendous impoverishment as a result of his punitive tariffs."
"All those affected must come together and stand up to this bully by building a very different international economy that promotes the interests of ordinary people rather than the oligarchs standing behind Trump," he argued. "For all its scraping and crawling, the U.K. got no special treatment here, and the government should learn this lesson fast: They need to stop giving away our rights and protections in a futile effort to appease Donald Trump."
Leaders in the United States are also encouraging resistance to Trump. U.S. Sen. Chris Murphy (D-Conn.) said Wednesday that "this week you will read many confused economists and political pundits who won't understand how the tariffs make economic sense. That's because they don't. They aren't designed as economic policy. The tariffs are simply a new, super dangerous political tool."
Murphy made the case that "the tariffs are DESIGNED to create economic hardship. Why? So that Trump has a straight face rationale for releasing them, business by business or industry by industry. As he adjusts or grants relief, it's a win-win: the economy improves and dissent disappears."
"But as long as we see this clearly, we can stop him. Public mobilization is working. Today, a few Republicans joined Democrats to vote against one set of tariffs," he added, referring to a
resolution that would undo levies on Canadian imports. "The people still have the power."
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Call What's Coming the 'Donald J. Trump Recession,' Says Economist
"While a recession may not be fully baked into the cards at this point, the risk is evident and it's almost entirely coming from Donald Trump's policies."
Mar 10, 2025
As U.S. financial markets continued their downward spiral on Monday amid rapidly mounting concerns about the impacts of President Donald Trump's erratic and destructive tariff policies, one economist argued that the president has almost single-handedly engineered economic conditions that could result in a recession in the near future.
"Past recessions have been the result of policy errors or disasters," Dean Baker, senior economist at the Center for Economic and Policy Research, wrote Monday. "The most typical policy error is when the Federal Reserve Board raises interest rates too much to counter inflation. That was clearly the story in the 1974-75 recession as well as the 1980-82 double-dip recession."
"Then we have recessions caused by collapsing financial bubbles, the 2001 recession following the collapse of the stock bubble and the 2008-09 recession following the collapse of the housing bubble. And of course, we had the 2020 recession because of the Covid pandemic," he added. "But now Donald Trump is threatening us with a recession, not because of something that is any way unavoidable, but rather because as president he has the power to bring on a recession."
Baker pointed specifically to Trump's decision to impose sweeping tariffs on imports from Canada, Mexico, and China, which the economist estimates will cost Americans roughly $2,000 per household as companies push the costs of the tariffs onto consumers in the form of higher prices.
Trump is going to give us a recession, because he can cepr.net/publications...
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— Dean Baker (@deanbaker13.bsky.social) March 10, 2025 at 12:04 PM
Retaliatory measures are also likely to inflict pain on Americans: On Monday, Ontario announced it would charge 25% more for the electricity it provides to Minnesota, New York, and Michigan in response to Trump's tariffs on Canadian imports, a move that's expected to hike electricity bills significantly for ratepayers in those states.
China, meanwhile, hit back at Trump Monday with an additional 15% tariff on U.S. farm products, including chicken, pork, soybeans, and beef.
Trump's tariff policies, and the widespread confusion surrounding their implementation, have sparked a sell-off on Wall Street and broader fears about the state of the U.S. economy as the labor market shows signs of stalling and consumer confidence plunges.
"While a recession may not be fully baked into the cards at this point, the risk is evident and it's almost entirely coming from Donald Trump's policies," Baker argued, noting that while the recession threat is "first and foremost" driven by tariffs, they "are just one possible route."
"The other is Elon Musk's DOGE team attack on the government. If there was ever any doubt, it is now clear that this outfit has nothing to do with increasing government efficiency," Baker wrote. "The direct impact of Musk's job cuts on both the budget and the economy is likely to be small. The bigger impact is the uncertainty they have created in large sectors of the economy."
"In short, Donald Trump has good reasons for telling us that his MAGA policies might give us a recession," he added. "It's hard to know how bad this recession would be, but it will definitely be the 'Donald J. Trump recession.'"
"Will the Trump slump turn into a recession? How will Trump lie and cheat his way out of it? Stay tuned."
Baker's assessment came a day after Trump declined to rule out the possibility of an economic recession in the U.S. this year and downplayed the effects of his tariffs, claiming without a shred of evidence that they will make the country "so rich you're not going to know where to spend all that money."
Trump previously insisted that the U.S. stock sell-off was attributable not to his chaotic tariff announcements, but to "globalists that see how rich our country is going to be and they don't like it."
Former U.S. Labor Secretary Robert Reich wrote Monday that just seven weeks after Trump's inauguration, "the bottom is falling out" of the U.S. economy.
"Stocks are plunging. Treasury yields are falling. Consumer confidence is dropping. Inflation is picking up," Reich wrote. "The cost of living—the single biggest problem identified by consumers over the last several years—is going up, not down. Trump's tariffs on steel and aluminum, and his threatened 25% tariffs on Canada and Mexico, are playing havoc with supply chains inside and outside America."
"Even before this Trump slump, only the richest 10% of Americans had enough purchasing power to keep the economy going with their spending. The bottom 90%—including most Trump voters—were barely getting by. The next eighteen months could be rough on millions of people," he continued. "Will the Trump slump turn into a recession? How will Trump lie and cheat his way out of it? Stay tuned."
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Medicare Defenders Slam 'Obscene' Looming Cuts to Telehealth Coverage
"We have trillions to spend on tax breaks for the rich and corporations," said one economic policy expert, "but we can't afford to cover telehealth visits for seniors?"
Feb 21, 2025
The announcement Thursday that Medicare will no longer cover many telehealth services starting April 1 prompted elder and telemedicine advocates to urge the Trump administration to continue the provision of vital remote care for millions of Americans.
According to the Medicare website, "you can get telehealth services at any location in the U.S., including your home" until March 31. Beginning April 1, "you must be in an office or medical facility located in a rural area... for most telehealth services. If you aren't in a rural healthcare setting, you can still get certain Medicare telehealth services on or after April 1."
These services include monthly kidney dialysis treatments; diagnosis, evaluation, or treatment of acute stroke symptoms; and mental and behavioral health services, including addiction treatment.
"What is the rationale for this, other than making life more difficult for many seniors?"
The announcement came as the White House signaled Republican U.S. President Donald Trump's openness to slashing Medicare's budget under the guise of the Department of Government Efficiency's (DOGE) mission of reducing "waste, fraud, and abuse."
"Unreal," economic policy expert Michael Linden
said on social media. "We have trillions to spend on tax breaks for the rich and corporations, but we can't afford to cover telehealth visits for seniors?"
One Trump supporter asked on social media: "Why is Medicare eliminating telemedicine? I'm a senior and find it very convenient. If it's fraud, figure out a way to prevent fraud. Have calls made over a government app! I want to know why!"
Congressman Ro Khanna (D-Calif.) asked, "What is the rationale for this, other than making life more difficult for many seniors?"
Campaign for New York Health executive director Melanie D'Arrigo accused Trump of "killing telehealth for seniors, because many seniors will skip seeing a doctor if they have to go in person."
"Patients skipping appointments saves money, but also leads to more preventable deaths," D'Arrigo added. "Guess which he cares about more?"
Dean Baker, senior economist at the Center for Economic and Policy Research, quipped: "Not sure who this is a handout to. I know Trump wants to burn as much fossil fuel as possible, so that is one motivation. Maybe people were getting fewer unnecessary tests with telemedicine, so the medical testing industry could also have been a factor. Any other explanations?"
Georges Benjamin, executive director of the American Public Health Association—an advocacy group for U.S. public health professionals—toldRoute Fifty's Kaitlyn Levinson Thursday that "the federal contribution is absolutely essential for [telemedicine] to be a seamless system."
However, Benjamin said that "it is unclear what the Trump administration's financial policies will be in terms of supporting telemedicine and incentivizing telemedicine."
Benjamin added that he hopes the Trump administration will "provide supplemental funding and support for states that want to beef up their telemedicine capacity."
The American Telemedicine Association (ATA), another advocacy group, last month praised Trump for temporarily expanding Medicare telehealth coverage during the Covid-19 pandemic.
"Trump can cement his legacy as the president to modernize the American healthcare system by permanently enabling omnichannel care delivery that leverages both in-person and virtual care," ATA senior vice president for public policy Kyle Zebley said in a statement.
"In doing so," Zebley added, "he will expand access to needed care for millions of patients, boost a beleaguered provider population, and create greater efficiencies and operational successes for struggling healthcare organizations."
American Medical Association president Dr. Bruce A. Scott said last month that "congressional action is required to prevent the severe limitations on telehealth that existed before the Covid-19 pandemic from being restored."
"We must make these flexibilities permanent and secure telehealth's future as an essential element of our patient toolbox, and ensure that all Americans—including rural, underserved, and historically marginalized populations—can receive full access to the care they need," Scott added.
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