A container terminal at the Port of Los Angeles in Long Beach, California, a major gateway to Pacific trade. (Photo courtesy of Wikipedia.org)
BOSTON – Donald Trump’s plan to slap punitive import taxes on countries like China and Mexico would lead to the erection of global trade barriers and impose “truly catastrophic” costs on the poorest American households, according to a study released Thursday.
The New York billionaire and presumptive Republican presidential nominee seems to love playing the trade card in claiming overly conciliatory agreements with nations such as China and Mexico have stacked the deck against the U.S. He has blamed job losses on the deals along with what he describes as a decline in American competitiveness in the global economy.
The former reality television star’s proposed remedy: impose import duties known as tariffs, which he claims will make American-produced goods more competitive. Trump’s plan – in effect, taxing targeted imports – would affect products from Mexico and China, and by implication Japan, one of America’s strongest Asian allies, the study says. The tariff rates would range from 35 percent on Mexican products to 45 percent on those from China.
But the plan would backfire, and the pain would felt most keenly by the poorest U.S. households as prices for affected goods rise and scarcity grows, according to the study by researchers at Suffolk University’s Beacon Hill Institute in Boston. The expense could exceed $5,000 a year and consume as much as 18 percent of household income in the poorest 10 percent of U.S. homes, and that’s only when the duties affect imports from just Mexico, China and Japan.
The damage would likely grow far beyond that, as the tariffs would have to be imposed on all U.S. trading partners to have the intended effect of blocking targeted items from China, Japan and Mexico, the researchers said. Such global trade barriers would suck almost $2.3 trillion out of the U.S. economy over five years and take more than half of the disposable income of the poorest 10 percent of American households, the study shows.
“Donald Trump’s tariffs won’t protect U.S. workers from imports unless expanded to all countries and doing so would have an even more devastating impact, equivalent to a $30,560 tax increase over 5 years for the typical U.S. household,” said Stuart Anderson, executive director of the National Foundation for American Policy, a nonprofit research organization in Washington that released the study Thursday.
“Low income households would spend between 18% to 53% of their after-tax income on tariffs and higher prices, hardly the way to make America great again,” Anderson said in a statement about the report.
The pain of Trump’s plan would fade in households with higher incomes, said the researchers, David Tuerck, the Boston institute’s executive director, Paul Bachman, the institute’s research director, and Frank Conte, its communications director.
“In other words,” they said in the report, “a Trump tariff against all countries (or even one against only China, Mexico and Japan) would be a regressive tax that burdens lower income households more than higher income households.”
As for benefits American manufacturers might reap from the policy, these would amount to just 15 percent of the loss to households, the report said. It concludes that Trump’s plan is “badly conceived.”
A container terminal at the Port of Los Angeles in Long Beach, California, a major gateway to Pacific trade. (Photo courtesy of Wikipedia.org) 
