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tariffs
'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.
[image or embed]
— 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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The Batshit Tariff Madness of King Trump
There are certainly issues that can be raised about trade, and our policies have often not benefited the country’s workers—but the president's approach is just crazy.
Apr 03, 2025
Suppose your doctor suddenly insisted that you needed to follow a strict diet and exercise regimen. He said he realized you had a serious problem when he divided your height by your birthday, and it came out way too high. You would probably decide that you need a new doctor.
This is basically the story of Donald Trump’s new round of import taxes (tariffs) on our trading partners. Trump somehow decided that trade was bankrupting the country, even though we were creating jobs rapidly, the economy was growing at a strong pace, and inflation was slowing to normal rates when he took office.
Trump’s response is 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. 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.
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.
There was much that Trump said in his Rose Garden address that made little sense. He repeated his bizarre claim that the United States had its greatest period of prosperity in the 1890s. This was a time when workers put in seven days a week, unions were largely illegal, and life expectancy was less than 50.
He then attributed the Great Depression to the income tax, and had it continuing after World War II and President Roosevelt’s death. In Trump’s telling of history, the post-war Golden Age from 1945 to 1973 did not exist. This was a period when the economy was growing rapidly, the gains from growth were broadly shared, and the top income tax rate was between 70 percent and 90 percent.
Trump’s account of the present was no more based in reality than his history of the United States. He told us that our trading partners and closest allies were all ripping us off.
Canada is one of the prime villains in Trump’s story. This is based on their trade surplus with the United States, which Trump insists is $200 billion a year. In reality, Canada’s trade surplus is roughly $60 billion, and this all due to the oil we import from them. Without our oil imports, we would have a trade surplus with Canada.
Ironically, Trump encouraged us to import more oil from Canada in his first term in office. Apparently, he has now decided that they are ripping us off by selling us the oil he wanted us to buy.
The fact that Trump’s aides have been unable to get him to correct his imaginary Canada trade surplus number is a clear warning that Trump’s big tariffs are not grounded in reality. There are certainly issues that can be raised about trade, and our policies have often not benefited the country’s workers.
The rapid expansion of trade with China and other developing countries in the first decade of this century cost us millions of manufacturing jobs. It also devastated manufacturing unions. As a result, the unionization rate in manufacturing is now barely higher than in the rest of the private sector. The historical wage premium paid in manufacturing has largely disappeared.
But it is a huge and absurd jump from this fact to Trump’s claim that all of our trading partners are ripping us off. In fact, in the course of his rambling address Trump gave a great example of how trade was benefitting the country.
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.
An outbreak of Avian flu sent egg prices soaring when Trump first took office. In response to the record high prices, Trump’s Agriculture Secretary negotiated huge purchases of eggs from South Korea and Turkey, making our trade deficits with both countries larger. Nonetheless, Trump boasted about how his administration had brought egg prices down.
It was this sort of warped thinking that is the basis for the massive tax that Trump is imposing on the goods we import from our trading partners. Incredibly, it turns out that the tax rates Trump put in place, from 10 percent on goods from the UK to 49 percent on Cambodia, which were ostensibly “reciprocal” tariffs, bear no relationship whatsoever to the tariffs or trade barriers these countries place on our exports.
Instead, 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 advisors has the courage and integrity to set him straight or to resign.
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Trump Is Wielding Tariffs to Help Billionaires, But They Can Be a Tool for Fair Trade, Too
Rather than reflexively dismiss tariffs altogether, those of us who care about sweatshop labor, plastic pollution, climate change, and other destructive by-products of tariff-free trade can still use them to demand a fairer economy.
Apr 03, 2025
President Donald Trump has said “tariff” is “the most beautiful word in the dictionary.” He claims tariffs will restore American trade supremacy, bring lost jobs back to the United States, and most bizarrely, replace income taxes.
Tariffs can be a useful tool to regulate global trade in the interest of jobs, wages, labor rights, the environment, and consumers—if applied correctly.
But Trump’s chaotic, overly broad tariffs are only likely to hurt working people. They won’t ensure labor rights or protect the environment. They won’t even return jobs to the U.S., if his first term tariffs are any indication.
Tariffs on oil imports, for example, if done correctly, can foot the bill to repair the climate destruction that fossil fuel companies profit from, and incentivize phasing out oil and gas altogether.
Because new tariffs require congressional approval, Trump manufactured a crisis about the flow of drugs and undocumented immigrants across U.S. borders in order to use executive power to unilaterally impose tariffs. He insists that foreign governments and companies pay these tariffs—and that imposing them on goods from Canada, Mexico, and China will solve all of the U.S.’ economic problems.
Tariffs aren’t the same as income taxes. When applied to goods being imported from, say, Canada, tariffs aren’t paid by either the Canadian manufacturer or the Canadian government. They’re paid by the U.S. importer to the U.S. government. So a company like Walmart would pay a fee in order to be able to import specific goods from Canada.
Importers will often pass increased tariffs on to consumers, resulting in higher prices. But as Hillary Haden of the Trade Justice Education Fund explained to me in an interview, that’s not a given. Sometimes tariffs are absorbed by the importer as the cost of doing business.
Unsurprisingly, the stock market is leery of tariffs, as are investors and free market champions, who’ve pushed for decades to demolish trade barriers via such initiatives as the World Trade Organization (WTO). Indeed, China has already filed a lawsuit against Trump’s tariffs at the WTO.
With the world’s free-trade-based economy teetering on a knife’s edge, Democrats are attempting to undo Trump’s haphazard tariffs, especially against our neighbors, Mexico and Canada. After all, it was a Democratic president—Bill Clinton—who signed the North American Free Trade Agreement (NAFTA) in 1992, turning all three member nations into a tariff-free zone. (In 2020, Trump signed the U.S.-Mexico-Canada agreement, replacing NAFTA.)
There’s good reason to criticize Trump’s blanket tariffs. But rather than reflexively dismiss tariffs altogether, those of us who care about sweatshop labor, plastic pollution, climate change, and other destructive by-products of tariff-free trade can still use them to demand a fairer economy.
In 1999, hundreds of thousands of activists, including union members and environmentalists, marched against the WTO in Seattle. The “Battle of Seattle,” as it came to be known, was the high point of the so-called anti-globalization movement, which sought to prioritize human rights, workers’ rights, conservation, and other considerations before corporate profits.
It was the pursuit of a “fair-trade” economy over a free-trade one.
So it’s ironic that President Trump is wielding tariffs as a central pillar of his pro-billionaire economic agenda—and his liberal opposition is championing free trade. Neither pro-billionaire trade nor unregulated trade is in the interests of working people.
Tariffs on oil imports, for example, if done correctly, can foot the bill to repair the climate destruction that fossil fuel companies profit from, and incentivize phasing out oil and gas altogether.
Similarly, tariffs on products manufactured with slave labor or underpaid labor can level the playing field for manufacturers who pay their workers a fair, living wage and ensure safe working conditions.
Rather than reflexively opposing tariffs because it is Trump’s latest fixation, we ought to demand a protectionist economy that can apply tariffs carefully, strategically, and thoughtfully in order to undo the damage of free market capitalism.
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