..Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!
— Donald J. Trump (@realDonaldTrump) August 5, 2018
One look at the most recent US Treasury statement shows how ridiculous Trump’s statement is. Here’s what the statement says US took in for “Customs Duties” (where tariffs fall under) for June 2018.
Customs Duties $3.51 billion month, $28.32 billion for first 9 months of Fiscal Year.
Now granted, that’s up 12% vs 2017 at the end of June, so we’ve added nearly $3.1 billion in duties for the Fiscal Year to this point.
The problem is that with the Trump Administration estimating $40.44 billion in Customs Duties for Fiscal Year 2018, that only accounts for 1.2% of the receipts for the US Government. And even if you doubled those amounts of tariffs to over $80 billion for Fiscal Year 2019, that’s going to do next to nothing to cut into a deficit projected to be near if not above $1 trillion.
In addition, the economic disruptions that are likely to occur because of the recklessness of the Trump tariffs can slow the economy (lowering tax revenues), and/or increase the costs for government services. In addition, those economic disruptions may cause a need for further spending to lessen the political problems that will result, such as Trump's proposed $12 billion bailout of farmers who are caught up in the crossfire of this trade war.
The again, maybe Donnie is thinking of a time when tariffs actually were a main source of revenue, and that it could happen again. The problem is that Drumpf is thinking of a time more than 100 years ago, before the federal income tax existed.
That was back in the Gilded Age, when corporate robber barons and crooked politicians worked together to control most things in politics at the expense of the other 99% of underpaid workers and farmers. Hey, wait a minute…
If I'm understanding right, any revenue generated here represents a cost for importers that will be passed onto consumers in the form of increased prices for imported goods and increased costs for moving goods to international markets due to reciprocal tariffs.
ReplyDeleteAs such, doesn't this function as a back door and mostly regressive consumption tax on US buyers and exporters?
Is there any argument to be made that the tariffs are meant to create a bargaining position with our trading partners as opposed to a long-standing independent revenue stream?
I think the main idea is that the tariffs are to try to improve terms of trade, and encourage more production of products in the US. It's not even a wrong idea if you do it right.
DeleteProblem is that the Trump Administration is not doing it right, and both our exporters and our consumers seem like they will pay a bigger price (literally) than any production that might stay here, or wage gains that might be realized due to a lesser threat of outsourcing.
Which is what made it doubly bizarre to hear Trump try to argue "revenue enhancer" as a positive to the tariffs. It just doesn't make much of a difference for our budget, and the loss of economic activity is likely to be a net NEGATIVE for the budget, especially with the $12 billion bailout to farmers and other "adjustments."