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Tariffs, Trade Wars and Recession

mjpardus
Aug 27, 20242 min read

Trump passed one of the largest tax increases in American history.[1]  Do we really want to give him the chance to do it again?

 

Tariffs, trade wars and recession are not a plan for economic growth. Even the conservative Wall Street journal says that the Trump economic plan represents “policies of the 1930s that were so destructive to economic prosperity.”[2]

 

The Trump economic agenda includes a 60% tariff on Chinese imports and a 10% tariff on all other goods entering the U.S., including our allies. Trump claims that trade wars are “good and easy to win.”[3] But as Fortune magazine reports “Trump’s tariffs could spark a trade war and ‘inflation shock’ within a year.”[4]

 

Trump falsely claim that tariffs are paid the exporting country. They are not. The increased costs of imported goods are passed directly to U.S. consumers.[5]

 

The conservative Cato Institute acknowledges that “a tariff is a form of tax.”[6] Trump’s tariff on Chinese goods has resulted in $230 billion in increased cost to American consumers - one of the largest tax increase in U.S. history.[7]

 

Trump’s proposed 60% tariff on Chinese goods alone would cost American consumers an additional $300 billion to $500 billion – a national sales tax of epic proportions.[8],[9]

 

A trade war with China and our allies inevitably follows from Trump’s tariffs.[10] In a global economy, a trade war is damaging to consumers and businesses and would grow to affect many aspects of the U.S. economy.[11] As noted in the Nation, inflation and recession will follow such a trade war.[12]

 

Trump’s former Treasure Secretary Larry Summers warns that the Trump economic agenda would “set off an inflationary spiral.”[13] Rising inflation triggers a response by the Federal Reserve to increase interest rates which can then result in economic stagnation.

 

Economic stagnation presages the inevitable recession, crippling the U.S. economy.[14],[15] We’ve seen this play out in the recession of the 1970s and 1980s. Record unemployment and interest rates lay in the wake of a long road to recovery.

 

Like so many Trump policies, his economic plan is rooted in the past. Do we really want to go back?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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